X  I  B  RAR.Y 

OF  THE 

U  N  IVERSITY 
OF    ILLINOIS 


.  385.4 


Illinois 
Hist.  Survey 


UNIVESITY  OF  ILLINOIS  STUDIES 

IN  THE 

SOCIAL  SCIENCES 

VOL.  «-,     NOS.3ANDA  SEPTEMBER    -    DECEMBER,     191B 


BOARD  OF  EDITORS 

ERNEST  L.  BOGART  JOHN  A.  FAIRLIE 

LAURENCE  M.  LARSON 


PUBLISHED  BY  THE  UNIVERSITY  OF  ILLINOIS 

UNDER  THE  AUSPICES  OF  THE  GRADUATE  SCHOOL 

URBANA,  ILLINOIS 


Reprinted  with  the  permission  of  the  University  of  Illinois  Press 

JOHNSON    REPRINT    CORPORATION       JOHNSON  REPRINT  COMPANY  LIMITED 
111  Fifth  Avenue,  New  York,  N.Y.  10003       Berkeley    Square    House,    London,    W.    1 


COPYRIGHT,  1915 
BY  THE  UNIVERSITY  OF  ILLINOIS 


First  reprinting,  1967,  Johnson  Reprint  Corporation 
Printed  in  the  United  States  of  America 


History  of  the  Illinois  Central 
Railroad  to  1 870 


HOWARD  GRAY  BROWNSON,  Ph.D. 


CONTENTS. 

CHAPTER  PAGE 

I     Illinois  in  1850 9 

II     The  Land  Grant  and  Charter 17 

III  Construction  of  the  Charter  Lines 40 

IV  Construction  and  Development,  1857  to  1870 64 

V     Traffic,  1857  to  1870 74 

IV    Finances  of  Construction  and  Operation,  1851  to  1870  116 

VII     Conclusion 157 

Appendix 165 

Bibliography _ 169 

Index ..  175 


INTRODUCTION. 

The  following  study  was  submitted  in  1909  as  a  thesis  in 
partial  fulfillment  of  the  requirements  for  the  doctor's  degree 
of  the  Graduate  School  of  the  University  of  Illinois.  Since  that 
date  the  "University  of  Illinois  Studies  in  the  Social  Sciences" 
have  been  established  as  a  medium  of  publication  for  mono- 
graphs prepared  by  members  of  the  faculty  or  graduate  stu- 
dents, and  it  seemed  desirable  that  Dr.  Brownson's  History  of 
the  Illinois  Central  to  1870  should  be  included  in  this  series. 
The  study  was  originally  planned  on  a  more  ambitious  scale 
as  a  complete  history  of  this  important  railroad  system,  and 
the  choice  now  presented  itself  of  asking  the  author  to  carry 
out  his  first  intention  or  of  printing  the  thesis  as  it  was  sub- 
mitted. The  latter  alternative  was  preferred  as  the  history  of 
the  first  twenty  years  covered  fully  the  early  development  of 
the  charter  lines  and  was  of  sufficient  interest  and  value  to 
justify  publication  without  further  delay.  When  the  work  was 
edited  for  publication,  however,  it  was  found  necessary  to  omit 
some  of  the  matter  included  in  the  thesis  as  originally  submitted 
and  also  to  make  some  textual  changes,  both  of  which  have 
been  approved  by  the  author.  Among  the  items  omitted  may 
be  mentioned  an  elaborate  series  of  traffic  charts  prepared  in 
connection  with  chapter  V,  of  financial  charts  and  tables 
for  chapter  VI,  David  A.  Neal's  Report  on  Traffic,  and  the 
correspondence  of  Breese  and  Douglas  relative  to  the  claims 
made  by  each  for  the  credit  of  the  land  grant.  These  may  all 
be  found  in  the  original  thesis,  which  is  on  file  in  the  University 
Library. 

It  is  believed  that  the  monograph  as  printed  contains  a 
substantial  contribution  not  merely  to  the  history  of  a  par- 
ticular railroad  system,  but  also  to  the  economic  history  of  the 
country.  Called  into  existence  to  meet  the  exigent  demand 
of  the  growing  population  of  the  interior  sections  of  the  state 
for  adequate  transportation  to  market  their  surplus  products, 
the  Illinois  Central  Railroad  was  built  in  1850,  after  several 


failures,  to  connect  the  rich  agricultural  region  of  central  Illi- 
nois with  the  historic,  and  as  it  seemed  the  natural,  market  in 
the  lower  Mississippi  valley.  But  the  industrial  development 
of  Europe  and  of  the  states  on  the  north  Atlantic  seaboard 
created  a  demand  for  agricultural  products  which  diverted  the 
traffic  of  the  road  from  the  lower  South  and  directed  it  to 
Chicago  and  the  East,  a  movement  which  was  emphasized  but 
not  occasioned  by  the  Civil  War.  How  well  the  road  met  these 
changing  demands  and  how  it  developed  during  these  early  and 
trying  years  of  its  history  are  here  clearly  told  by  Dr.  Brownson. 

Acknowledgments  may  properly  be  made  to  the  officials  of 
the  Illinois  Central  Railroad  for  cooperation  with  the  author 
in  the  preparation  of  this  monograph,  especially  to  Mr.  Stuyve- 
sant  Fish,  then  president  of  the  road,  for  the  loan  of  original 
material  and  for  personal  assistance,  and  to  Mr.  L.  C.  Fritch; 
to  the  libraries  mentioned  in  the  bibliography  for  the  use  of 
their  facilities  and  for  various  courtesies;  and  finally  to  Pro- 
fessor E.  R.  Dewsnup  of  the  University  of  Illinois  for  his  advice 
and  assistance  in  the  writing  of  the  thesis. 

E.  L.  BOGART. 

University  of  Illinois 
December  1,  1915. 


CHAPTER  I. 

ILLINOIS  IN  1850. 

It  has  been  said  that  a  history  of  the  Illinois  Central  Rail- 
road is  a  history  of  Illinois.  The  project  for  a  railroad  through 
the  center  of  Illinois  was  one  of  the  first  propositions  for  internal 
improvement  in  the  West.  Its  construction  between  1851  and 
1857  opened  up  to  settlers  the  rich  interior  counties  of  the  state ; 
and,  when  completed,  it  connected  these  agricultural  counties 
with  the  remainder  of  the  country,  and  made  Illinois  an  essen- 
tial part  of  the  economic  system  of  the  United  States. 

The  building  of  the  Illinois  Central  Railroad  and  its  subse- 
quent growth  was  the  natural  result  of  economic  and  social 
conditions  in  the  Middle-West  which  made  necessary  such  a  sys- 
tem of  internal  transportation.  A  glance  at  the  map  shows  that, 
while  Illinois  is  practically  encircled  by  natural  waterways,  the 
interior  of  the  state,  which  is  by  far  the  most  fertile  portion,  is 
without  natural  means  of  transportation.1  Such  counties  as 
Coles,  McLean,  Macon,  and  Champaign  were,  before  the  intro- 
duction of  the  railroad,  almost  entirely  isolated. 

In  the  early  history  of  Illinois,  various  attempts  had  been 
made  to  provide  a  comprehensive  system  of  internal  transporta- 
tion, but  the  results  were  of  slight  importance.  The  most 
successful  of  such  undertakings  was  the  Illinois  and  Michigan 
Canal  from  Chicago  to  La  Salle.  It  was  commenced  about  1820, 
Imt  financial  difficulties  prevented  its  completion  until  1848. 
The  canal  was  the  most  fortunate  of  all  the  enterprises  started 
by  the  state,  and  for  a  number  of  years  it  was  of  great  value. 
Nevertheless  it  served  only  a  limited  area ;  its  capacity  prevented 
the  use  of  large  and  economical  canal  boats ;  frequent  breaks  in 
the  masonry  or  at  the  locks  made  navigation  difficult  even  dur- 
ing the  summer  months;  and,  finally,  ice  rendered  the  canal 
useless  during  the  winter  season.2 

1The  territory  tributary  to  parts  of  the  Kankakee  and  Illinois  rivers 
is  an  exception,  but  the  size  of  this  territory  is  comparatively  small. 

^Chicago  Daily  Democrat,  1849-1851 ;  references  in  Davidson  and 
Stuve,  A  Complete  History  of  Illinois,  under  Illinois-Michigan  Canal ;  cf. 
Moses,  Illinois  Historical  and  Statistical,  references  in  index  to  Illinois- 
Michigan  Canal. 

9 


10  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [294 

The  Legislature,  as  well  as  private  citizens,  had  made  many 
efforts  to  supplement  the  Canal  with  a  system  of  railroads.  As 
early  as  1837,  the  General  Assembly  had  planned  an  extensive 
system  of  internal  improvements,  and,  without  accurate  surveys 
or  estimates,  ten  million  dollars  were  appropriated  to  build 
twelve  hundred  miles  of  railroad,  deepen  the  rivers  of  the  state, 
and  provide  numerous  turnpikes.  Millions  were  borrowed,  and 
expended  with  a  lavish  hand,  but  mismanagement,  corruption, 
and  the  exhaustion  of  public  credit  at  a  time  when  all  financial 
undertakings  were  paralyzed  by  the  panic  of  1837,  brought  the 
state  to  the  verge  of  bankruptcy.  A  few  surveys,  a  hundred 
miles  of  half  completed  railway  embankment,  and  one  poorly 
constructed  railroad,  utterly  useless  for  traffic,  were  the  results 
of  this  chimerical  experiment.3 

Private  construction  of  railroads  was  somewhat  more  suc- 
cessful. In  the  center  of  the  state,  the  old  Springfield  and  Mere- 
dosia  Railroad,  from  Springfield  to  Jacksonville,  constructed  by 
the  state  in  1837,  had  been  entirely  rebuilt  by  private  parties, 
under  the  name  of  the  Springfield  and  Sangamon.  In  the  north, 
the  Galena  and  Chicago  Union  project  had  been  revived,  and 
the  railroad  extended  to  a  point  about  twenty  miles  west  of 
Chicago.4  These  lines  at  their  best  gave  service  of  but  one 
freight  and  one  passenger  train  a  day,  and  the  few  thousand 
tons  of  wheat  and  merchandise  carried  by  them  was  a  mere 
bagatelle,  compared  with  the  enormous  quantities  of  freight 
transported  from  the  neighboring  counties  a  few  years  later. 
Schedule  time  was  slow,  and  actual  time  was  even  slower.  Rates 
were  too  high  and  service  too  poor  to  satisfy  the  necessities  of 
even  the  adjoining  territory.5 

Aside  from  the  few  rivers,  the  lakes,  the  canal,  and  the  two 
short  railroads,  local  transportation  did  not  exist.  Words  are 
lacking  to  describe  properly  the  wretched  condition  of  Illinois 
highways  in  1850:  There  were  a  few  old  corduroy  roads  and 
three  or  four  government  turnpikes,  but  they  were  short  and  ill- 
kept.  Elsewhere  former  Indian  trails  or  newly  made  section 
roads  were  the  only  semblances  of  highways  that  existed.  In 
summer  these  roads  were  little  better  than  the  surrounding 
prairies,  often  worse ;  in  winter  they  were  mere  mud  holes.  For- 

3Newton,  Early  Illinois  Railway  Legislation,  Chap.  iv.  Mr.  Newton 
gives  a  bibliography  on  the  subject,  which  may  be  used  for  further  read- 
ing. Cf.  Moses,  Illinois  Historical  and  Statistical,  references  in  index  to 
Internal  Improvement  Act. 

4Newton,  Railway  Legislation  in  Illinois,  1828  to  1870,  pp.  29  ff. 

''Ibid.;  cf.  Chicago  Daily  Democrat,  1849,  1850. 


295]  ILLINOIS  IN  1850  11 

tunate,  indeed,  was  fhe  traveller  who  was  not  compelled  to  help 
pry  the  coach  out  of  the  deep  mud  or  wait  until  morning  for  a 
yoke  of  oxen  to  pull  him  out  of  some  worse  than  ordinary 
slough.  Mails  were  often  delayed,  and,  during  the  winter  storms 
and  spring  rains,  farm  houses,  and  even  large  towns  were  com- 
pletely isolated.  Moreover,  the  state  had  shown  itself  utterly 
unable  to  remedy  these  evils.  The  statute  books  were  filled  with 
enactments  declaring  certain  trails  or  mud  roads  public  turn- 
pikes, but  even  a  sovereign  state  cannot  legislate  a  mud  hole 
into  a  turnpike.  Charters,  almost  without  number,  were 
granted  to  private  corporations,  but  without  tangible  results  of 
any  importance.6  Local  enterprise  was  equally  fruitless,  and 
the  efforts  of  the  counties  to  improve  the  public  roads  had  gen- 
erally failed. 

The  absence  of  good  transportation  facilities  greatly 
retarded  the  economic  development  of  central  Illinois.  The  cost 
of  carrying  freight  over  ordinary  country  roads  or  even  on  well- 
built  highways,  under  the  most  favorable  circumstances,  is  very 
great.7  On  such  roads  as  existed  in  Illinois  in  1850  the  expense 
of  moving  heavy  freight  for  any  distance  was  practically  pro- 
hibitive, and  ten  to  twenty  miles  was  as  far  as  grain  or  other 
bulky  goods  could  be  hauled  with  any  degree  of  profit.  As 
nearly  all  the  products  of  the  interior  counties  of  Illinois  con- 
sisted of  articles  of  small  value  compared  with  their  bulk,  an 
extensive  network  of  railroads,  or  canals,  was  necessary  to  the 
proper  economic  development  of  the  state.  Instead  of  such  a 
system  of  internal  transportation,  Illinois  had  less  than  a  hun- 
dred and  fifty  miles  of  railroads  and  canals,  and  all  portions  of 
the  state  more  than  ten  to  twenty  miles  back  from  the  railroads, 
the  canal,  the  lake,  and  the  rivers  were  practically  isolated.  A 
farmer  living  in  the  interior  of  the  state  could  carry  only  a 
small  part  of  his  crop  of  wheat  or  corn  to  market  to  be 
exchanged  for  "store  goods",  and  the  total  amount  of  grain 
received  at  Chicago,  St.  Louis,  Peoria,  and  other  centers  which 
came  from  the  central  counties  was  insignificant. 

The  interior  counties  of  Illinois,  as  stated  above,  were  the 
most  fertile  parts  of  the  state,  and  their  isolation  had  a  retarding 
influence  on  the  economic  development  of  the  commonwealth. 

^Session  Lcm's  of  Illinois,  1837-1850. 

7The  cost  of  carrying  a  ton  of  freight  from  Buffalo  to  New  York  was 
$100  by  wagon,  or  about  20c  per  ton  per  mile.  (Bogart,  Economic  His- 
tory of  the  United  States,  p.  191).  This  was  over  good  roads  and  the 
cost  per  ton  per  mile  for  carrying  grain  in  Illinois  must  have  averaged 
considerably  more. 


12  HISTORY   OP    ILLINOIS   CENTRAL   RAILROAD  [296 

The  earliest  settlements  in  Illinois  were  made  by  the  French  at 
Cahokia  and  Kaskaskia  near  the  Mississippi  River,  and  until  the 
end  of  the  third  decade  nearly  all  subsequent  settlements  were 
also  near  the  banks  of  the  Ohio,  the  Mississippi,  and  Illinois 
rivers,  and  especially  in  the  southern  counties.  At  that  time  the 
majority  of  the  population  were  immigrants  or  descendants  of 
immigrants  from  Kentucky,  Tennessee,  and  other  parts  of  the 
South.8  Then  from  1830  to  1850  there  occurred  a  heavy  immi- 
gration into  the  northern  and  central  counties,  but  most  of 
these  new  settlers  were  from  the  eastern  states  or  Europe.9  By 
1850  Illinois  had  a  population  of  eight  hundred  and  fifty  thou- 
sand, and  three  fourths  of  the  inhabitants  were  living  north  of 
Vandalia  and  were  of  northern  or  European  stock.10  Further- 
more, despite  the  absence  of  good  transportation,  three  hun- 
dred and  seventy  five  thousand  people  were  in  the  thirty  six 
counties  which  possessed  neither  a  canal,  a  river  nor  a  railroad, 
and  the  number  living  more  than  ten  miles  from  such  means 
of  communication  must  have  been  considerably  larger.11  But 
this  population  was  only  a  fraction  of  what  could  be  supported 
in  the  same  counties  when  railroads  and  good  turnpikes  were 
introduced. 

As  the  great  bulk  of  the  population  in  1850  was  engaged 
in  agriculture,  the  inadequate  system  for  transportation  of  farm 
products  had  a  depressing  influence  on  that  occupation  which  in 
turn  affected  all  other  industries  of  the  commonwealth.  Farmers 
living  near  the  waterways  and  railroads  found  good  markets 
for  their  produce,  but  those  not  so  favorably  situated  shipped 
little  grain  or  meat  outside  the  state.  Only  slight  cultivation 
of  the  rich  prairie  soil  wras  necessary  to  produce  abundant  crops, 
and  the  immediate  needs  of  the  farmer  and  his  family  were  easily 

8Sixth  Census  (1840)  ;  Greene,  Government  of  Illinois,  p.  26;  cf. 
various  addresses  of  Mr.  C.  W.  Alvord,  of  the  University  of  Illinois,  on 
this  subject  in  publications  of  the  Illinois  State  Historical  Library. 

9Eighth  Census  (1860). 

10Seventh  Census  (1850),  pp.  117,  118.  The  thirty  counties  south  of 
Vandalia  had  a  population  of  219,863 ;  the  sixty-nine  counties  north  of 
Vandalia  had  631,607.  The  foreign  born  population  was  as  follows : 
England,  18,628;  Scotland,  4,661;  Wales,  572;  Ireland,  27,786;  British 
America,  10,699;  Germany,  38,446;  total,  110,593.  Native  born  of  foreign 
parentage,  not  given. 

illbid.  The  thirty-six  counties  not  crossed  by  the  Illinois-Michigan 
Canal,  the  Galena  and  Chicago  Union  and  Springfield  and  Sangamon 
railroads,  and  the  Illinois,  Ohio,  and  Mississippi  rivers,  had  a  population 
°f  375.529  in  1850,  or  44.1%  of  the  total  population. 


297]  ILLINOIS  IN  1850  13 

supplied.  Labor  saving  farm  machinery  was  not  in  general 
use,  and  the  work  of  gathering  the  crops  had  to  be  performed 
by  hand;  farm  labor  was  scarce  and  commanded  high  wages. 
As  a  result,  there  was  little  incentive  to  raise  large  crops,  while 
the  large  amount  of  physical  work  involved  made  it  impossible 
for  the  farmer  to  plant  or  gather  more  than  a  moderate  yield. 
Shiftless  methods  of  farming  were  the  natural  consequence  and 
only  a  small  portion  of  the  arable  land  was  under  cultivation. 
Out  of  a  total  area  of  thirty  five  million  acres,  slightly  over 
three  million  were  planted  in  the  five  staples,  wheat,  corn,  oats, 
rye,  and  potatoes.12  One  third  of  the  entire  area,  or  eleven  and 
a  half  million  acres,  was  still  unoccupied  government  land,13 
and  much  of  the  remainder  had  never  been  broken  by  the 
plough.14.  The  yield  per  acre  was  much  less  than  could  be 
expected  from  the  almost  virgin  soil  of  the  prairies.15  Cultiva- 
tion of  fruit  and  vegetables  was  neglected,  and  three  quarters 
of  a  million  dollars  would  be  an  ample  estimate  of  the  value  of 
all  the  orchard  and  market  crops  of  the  state.16  The  production 
of  the  three  leading  grains,  wheat,  corn,  and  oats,  was,  of 
course,  large,  but  corn  and  oats  constituted  eighty-eight  per 
cent  of  the  yield  of  these  three  crops,  as  against  twelve  per  cent 
for  wheat.  However,  they  were  so  bulky  compared  with  their 
value  at  market  that  the  entire  production  of  both  corn  and 
oats  was  of  little  importance,  except  for  use  on  the  farm.17  In 
general,  prices  were  high,  but  the  excessive  cost  of  transporta- 
tion and  the  great  expense  of  gathering  the  crops,  resulting- 
from  poor  methods  of  farming,  gave  the  farmer  only  a  meagre 
profit.18 

Perhaps  the  most  profitable  form  of  agriculture  at  that 
time  was  the  raising  of  live  stock,  especially  swine.  Through 
stock  trains  and  refrigerator  cars  did  not  exist,  and  all  meat 
had  to  be  salted  or  pickled  on  or  near  the  farm.  This  seriously 
restricted  the  raising  of  cattle  and  sheep,  but  did  not  affect  the 
pork  business,  which  enjoyed  a  period  of  prosperity  seldom 

12Letter  of  Rantoul,  Documents  Relating  to  the  Organization  of  the- 
Illinois  Central  Railroad. 

13Ibid.;  Seventh  Census  (1850),  p.  730. 

"Seventh  Census  (1850),  p.  730. 

15Compendium  U.  S.  Census,  1850,  p.  170.     Average  yield  in  bushels 
per  acre  was  :   wheat,  1  1  ;  rye,  14  ;  corn,  33  ;  oats,  29  ;  barley,  40. 


17The  cost  of  hauling  a  bushel  of  wheat  was  no  greater  than  the  cost 
of  hauling  a  bushel  of  corn,  and  yet  the  price  of  the  former  averaged 
about  three  times  that  of  the  latter. 

18Cf.  Chap.  v. 


14  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [298 

equalled.  Over  two  million  swine  were  on  the  various  farms 
and  something  like  a  million  were  slaughtered  each  year.19  A 
large  part  of  the  corn  crop  was  used  for  feeding  cattle  or  hogs, 
and  was  thus  sent  to  the  market  on  "the  hoof".20 

Mining  was  affected  by  lack  of  cheap  .transportation  to  an 
even  greater  extent  than  agriculture.  In  1850  coal  was  mined 
in  all  parts  of  the  state,  especially  in  the  Danville,  La  Salle, 
Springfield,  and  Du  Quoin  districts.  The  mines  at  Danville, 
Du  Quoin,  and  Springfield  had  been  in  operation  for  a  com- 
paratively short  time  and  were  of  only  local  importance.21  The 
La  Salle  field,  being  located  on  the  Illinois  and  Michigan  Canal, 
and  thus  possessing  comparatively  good  transportation  facilities, 
was  the  most  important  district  in  the  state.  However,  it  was 
handicapped  by  the  high  cost  of  mining,  which  was  about  one 
dollar  per  ton  more  than  in  the  Ohio  mines.  This  prevented  it 
from  supplying  the  Chicago  market  to  any  considerable  extent.22 
The  Belleville  mines  were  the  oldest  in  the  state,  and  produced 
nearly  one  half  the  coal  mined  in  Illinois.  Their  proximity  to 
St.  Louis  made  the  mines  of  this  district  very  profitable.23  For 
some  reason  lead-mining  was  of  less  importance  in  1850  than  it 
had  been  fifteen  or  twenty  years  earlier.  The  Galena  district 
was  the  only  part  of  the  state  where  any  considerable  amount  of 
lead  was  mined,  and  even  there  the  yield  was  on  the  decrease.24 
Thus,  both  coal  and  lead-mining  were  of  comparatively  little  im- 
portance, and  less  than  a  thousand  miners  were  employed  in  the 
entire  state  in  1850.25 

Illinois  was  primarily  an  agricultural  state  at  the  close  of 
the  fifth  decade  of  the  19th  century  and  a  very  small  proportion 
of  the  population  was  engaged  in  other  pursuits.  Slightly  over 
3100  different  establishments  existed  in  the  state,  varying  in 
size  from  a  small  village  tannery  or  carpenter  shop  employing 
two  or  three  men  to  large  plants  such  as  the  McCormick  Reaper 
Company  at  Chicago.26  Altogether,  the  industries  of  the  state 

"Compendium  U.  S.  Census,  1850,  p.  170. 

20Cf.  Chap.  v. 

21 J.  W.  Foster,  Report  on  Mineral  Lands  on  the  Illinois  Central  Rail- 
road. 

"Ibid. 

23Ibid.;  Ackerman,  Early  Illinois  Railroads,  p.  17. 

24 Wm.  Spensley,  The  Mines  of  Jo  Daviess  County;  Seventh  Census 
(1850),  p.  115. 

25J.  W.  Foster,  Report  on  Mineral  Resources  on  the  Illinois  Central 
Railroad;  Seventh  Census  (1850),  p.  115.  Cf.  Chap.  v. 

28Seventh  Census  (1850),  p.  115. 


299]  ILLINOIS  IN  1850  15 

had  a  capital  of  six  and  a  half  million  dollars,  employed  a  force 
of  twelve  thousand  hands,  and  produced  products  valued  at 
seventeen  and  a  quarter  millions.27  Packing,  flouring  mills,  dis- 
tilleries, breweries,  iron  and  steel  works,  woolen  mills,  agricultural 
implement  works,  ship  building  plants,  tanneries,  and  brick  works 
were  the  leading  industries.28  Outside  of  the  cities  industrial 
conditions  were  backward,  but  not  as  primitive  as  many  writers 
indicate.  The  log  cabin  and  homespun  were  regarded  as  evi- 
dences of  lack  of  progress,  and  settlers,  even  on  the  isolated 
farms  of  the  interior,  were  supplied  with  many  of  the  luxuries  of 
civilized  life. 

The  lack  of  internal  transportation,  with  the  accompanying 
isolation  of  the  interior  counties  of  the  state,  the  backward  agri- 
cultural conditions,  and  the  unimportance  of  mining  and  manu- 
facturing were  an  effective  check  on  the  trade  between  Illinois 
and  the  eastern  and  southern  states.  In  the  period  before  the 
Civil  war  there  were  three  principal  markets  for  the  surplus 
products  of  the  Northwest,  (1)  the  North  Atlantic  seaboard, 
(2)  the  lower  Mississippi  valley,  and  (3)  western  Europe.  In 
1850  there  was  good  connection  between  Chicago  or  St.  Louis 
and  these  markets.  The  Great  Lakes  and  the  Erie  Canal  afforded 
western  grain  the  cheapest  means  of  inland  transportation  in 
the  country.  The  Mississippi  River  likewise  offered  cheap 
transportation  to  the  population  along  its  banks.  The  introduc- 
tion of  the  steamboat  on  both  the  Great  Lakes  and  the  rivers 
permitted  extensive  reductions  in  the  cost  of  carrying  such 
bulky  goods  as  grain  and  lumber.  Consequently,  farm  products 
could  be  sent  east  or  south  over  the  waterways  at  reasonable 
charges  after  they  had  been  brought  to  a  lake  or  river  port. 

However,  as  already  noted,  the  lack  of  roads,  canals,  and 
railroads  prevented  the  movement  of  grain  and  pork  from  the 
central  counties  of  Illinois  to  either  the  lake  or  the  Mississippi 
River.  Only  the  counties  directly  on  the  banks  of  the  water- 
ways could  take  advantage  of  the  low  charges  from  Chicago  or 
St.  Louis  to  New  York  or  New  Orleans.  In  other  words,  the 
great  agricultural  resources  of  Illinois  were  unavailable.  Illi- 
nois wheat,  corn,  oats,  and  live  stock  were  shipped  east  or  south 
in  comparatively  slight  quantities.  Although  the  state  ranked 
first  among  all  the  states  of  the  Union  in  the  yield  of  grain, 
New  York,  Pennsylvania,  Ohio,  Indiana,  Missouri,  Kentucky 

"Seventh  Census  (1850),  p.  115;  cf.  Chap.  v. 

28For  a  much  more  detailed   description  of  the  trade  routes   from 
Illinois  east  and  south,  cf.  Chap.  v. 


16  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [300 

and  Tennessee  each  supplied  a  larger  portion  of  the  southern, 
eastern  or  European  demand  than  did  Illinois.  Out  of  a  total 
production  of  seventy-seven  million  bushels  of  the  three  staples, 
oats,  corn  and  wheat,  less  than  three  million  bushels  were  for- 
warded from  Chicago  and  the  amount  sent  from  Ohio  or  Missis- 
sippi river  towns  was  not  much  larger.29  If  we  compare  the 
production  and  shipments  of  grain  in  1850  and  1880,  for  in- 
stance, the  difference  shows  among  other  things  the  effects  of 
poor  transportation  on  the  state.  Against  seven  or  eight  million 
bushels  shipped  east  and  south  in  1850  twenty  times  as  much  was 
moved  in  the  later  year. 

With  conditions  as  they  were  in  the  middle  of  the  nineteenth 
century,  the  most  important  need  of  Illinois  was  some  system  of 
transportation  which  would  connect  the  fertile  interior  counties 
with  the  Great  Lakes  and  the  Mississippi  Eiver.  The  develop- 
ment of  a  large  portion  of  the  state  depended  upon  the  con- 
struction of  such  means  of  communication.  Many  schemes  came 
before  the  people,  but  the  one  that  had  the  greatest  possibilities 
and  which  appealed  most  strongly  to  the  imagination  of  the 
citizens  of  the  state  was  a  central  railroad  from  Galena  to 
Cairo.30 

2gChicago  Daily  Democrat,  January  23,  1850;  Seventh  Census  (1850). 

30The  most  important  references  used  in  this  and  subsequent  chapters 
are  found  in  the  footnotes  at  the  bottom  of  each  page.  At  the  end  of 
Chapter  vn  a  critical  bibliography  of  all  authorities  made  use  of  in  this, 
monograph  will  be  found.  Many  of  the  topics  treated  in  Chapter  i  are 
discussed  at  greater  length  in  Chapter  v,  and  cross  references  are  given. 


CHAPTER  II. 

THE  LAND  GRANT  AND  CHARTER. 

A  great  central  highway  connecting  the  northern  and 
southern  counties  of  Illinois  had  always  been  a  favorite  project 
with  the  legislatures  and  executives  of  the  state.  As  early  as 
1830  Governor  Coles  suggested  that  ''Lake  Michigan  .  .  . 
might  easily  be  tapped  and  the  water  taken  by  canals  not  only 
into  the  Illinois,  but  on  the  dividing  line  between  that  river  and 
the  Wabash  down  through  the  center  of  the  state."1  Only  two 
years  later,  Lieutenant  Governor  A.  M.  Jenkins  proposed  in  the 
Senate  that  a  survey  be  made  for  a  central  railroad  from  Cairo 
to  Peru,2  and,  though  somewhat  premature,  the  proposal  cre- 
ated considerable  discussion,  both  in  and  out  of  the  legislature. 
By  1835,  the  building  of  the  "Central"  had  become  one  of  the 
important  issues  in  state  politics.  The  project  was  ably  advo- 
cated by  such  newspapers  as  the  Sangamo  Journal3  and  also 
by  a  number  of  leading  citizens,  prominent  among  them  being 
Sidney  Breese,  whose  fifteen  years  of  service  in  promoting  the 
undertaking  entitles  him  to  be  called  the  "Father  of  the  Illinois 
Central  Railroad".4 

With  such  support  it  was  not  long  before  definite  measures 
were  taken,  and  on  January  18th,  1836,  the  Illinois  legis- 
lature incorporated  the  Central  Railroad  Company  to  construct 

a  railroad  from  ' '  the  mouth  of  the  Ohio to  a  point 

on  the  Illinois  River  at  or  near  the  termination  of  the  Illinois 
and  Michigan  Canal."5  Fifty-nine  incorporators  were  named, 
among  them  Governor  Reynolds,  Lieutenant  Governors  A.  M. 
Jenkins  and  Pierre  Menard,  Judge  Sidney  Breese,  Darius  B. 
Holbrook  and  Albert  K.  Snyder,6  and  a  capital  of  two  and  a 

^Illinois  Monthly  Magazine,  Vol.  I,  No.  i,  October,  1830. 

2Newton,  Early  Railway  Legislation  in  Illinois,  p.  7 ;  Ackerman,  His- 
torical Sketch  of  the  Illinois  Central  Railroad,  pp.  6,  7. 

sSangamo  Journal,  October  31,  1835. 

4Cf.  Appendix  to  Early  History  of  Illinois  by  Sidney  Breese.  In  this 
book  Mr.  Breese  reviews  his  efforts  in  behalf  of  the  Illinois  Central 
Railroad. 

^Session  Laws  of  Illinois,  1835-1836,  pp.  129  ff. 

'Among  the  incorporators  were  Mr.  Holbrook  and  several  other 

17 


18  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [302 

half  million  dollars  was  authorized.  From  the  first,  this  road 
was  regarded  as  a  peculiar  state  institution,  and  lest  its  policy 
should  be  dominated  by  a  foreign  monopoly,  ^provision  was  made 
that  no  person  could  subscribe  to  more  than  five  shares  of  stock 
and  that  at  least  one  fifth  of  the  capital  should  be  offered  for 
sale  in  the  state.7  Provision  was  also  made  that,  whenever  the 
company  earned  more  than  twelve  per  cent  on  the  cost  of  con- 
struction for  a  period  of  ten  years,  the  legislature  could  so 
reduce  earnings  and  tolls  for  the  next  ten  years  that  the  earn- 
ings would  not  exceed  that  amount,  reports  being  made  to  the 
state  to  show  cost  of  construction  and  gross  and.  net  receipts.8 
In  return  for  this  restriction  on  the  powers  of  the  company,  the 
legislature  inserted  a  clause  in  the  charter  agreeing  not  to  incor- 
porate any  competitive  railroad  for  a  period  of  fifty  years.9 

However,  the  promoters  of  the  railroad  had  chosen  a  most 
inopportune  time  for  commencing  this  important  undertaking. 
During  the  thirties  the  country  was  agitated  by  one  of  those  pop- 
ular movements  in  favor  of  government  aid  to  internal  improve- 
ments. In  Illinois,  after  months  of  agitation,  mass  meetings, 
and  conventions,  the  movement  culminated  in  the  celebrated 
internal  improvement  act  of  1837.  This  act  provided  for  an 
extensive  network  of  railroads  intersecting  the  state  in  all  direc- 
tions. The  backbone  of  the  system  was  to  be  a  central  railroad 
from  Cairo  northward,  via  Vandalia,  Shelbyville,  Decatur, 
Bloomington,  and  Savannah,  to  Galena,  at  that  time  the  most 
important  city  in  the  state.10  In  addition  there  were  several 
cross  lines  extending  from  the  main  stem  to  the  importanl_cities 
on  the  eastern  or  western  boundaries.  One  of  these  branches 
from  Shelbyville  or  Decatur  to  the  state  line  corresponded  very 
closely  to  the  Chicago  branch  under  the  act  of  1851.11  The 
entire  system  amounted  to  about  twelve  hundred  miles,  but  the 
estimates  as  to  cost  of  construction  were  surprisingly  low.  Three 

gentlemen  connected  with  him  in  later  enterprises,  but  as  the  company 
never  commenced  active  construction  work,  it  is  impossible  to  say  whether 
this  company  was  controlled  by  Mr.  Holbrook.  As  he  was  not  a  resident 
of  Illinois  and  otherwise  would  not  have  been  among  the  incorporators, 
the  presumption  is  that  he  had  a  very  important  influence  in  the  organiza- 
tion of  the  company  under  this  act  of  1836. 

7 Session  Laws  of  Illinois,  1835-1836,  p.  134. 

*Ibid.,  p.  133. 

9Ibid.,  sec.  6. 

^Session  Laws  of  Illinois,  1836-1837,  p.  121 ;  Newton,  Early  Railway 
Legislation  in  Illinois,  pp.  21-23. 


303]  LAND   GRANT  AND   CHARTER  19 

and  a  half  million  dollars  was  regarded  as  sufficient  to  build 
the  four  hundred  and  fifty  miles  of  the  main  line,  while  the 
Shelbyville  and  Alton  branches  were  to  cost  $650,000  and  $600,- 
000  respectively,  or  from  seven  to  ten  thousand  dollars  per 
mile;12  less  than  one  fourth  what  it  cost  the  present  company 
fifteen  years  later.13  A  loan,  based  on  the  credit  of  the  state, 
was  to  provide  funds,  while  a  board  of  seven  commissioners  was 
appointed  to  manage  the  enterprise  during  its  construction  and 
after  completion.14  Immediately  after  the  passage  of  the  act 
these  commissioners  commenced  work,  and  for  a  while  it  seemed 
as  if  this  colossal  undertaking  might  be  finished.  Grading  was 
commenced  at  Cairo,  Galena,  and  intermediate  points;  tens  of 
thousands  of  dollars  were  expended  on  the  dikes  and  levee  at 
Cairo;  large  quantities  of  rails  were  purchased;  about  forty 
miles  of  embankment  north  of  Cairo  were  completed;  and,  alto- 
gether, something  like  a  million  dollars  was  expended  on  the 
central  route  and  branches,  although  certainly  not  in  the  most 
effectual  manner.15  But  the  task  was  entirely  beyond  the  ability 
of  the  state;  financial  difficulties  prevented  the  floating  of  the 
necessary  bonds ;  and  extravagance,  corruption,  and  mismanage- 
ment exhausted  the  money  already  procured.  The  result  was 
that  a  hundred  miles  of  grading  and  a  few  thousand  tons  of  iron 
were  the  only  tangible  results  of  this  second  attempt  to  con- 
struct a  railroad  through  the  center  of  Illinois.16 

Even  this  failure  did  not  deter  the  state  or  its  citizens  from 
endeavoring  to  complete  the  project,  and  on  March  6th,  1843, 
only  six  years  after  the  passage  of  the  Internal  Improvement 
Act,  the  legislature  incorporated  the  Great  Western  Railway 
Company,  better  known  as  the  Holbrook  Company.17  To  under- 

12Session  Laws  of  Illinois,  1836-1837,  p.  121 ;  Newton,  Early  Railway 
Legislation  in  Illinois,  pp.  21-23. 

18Cf.  Chap.  vi. 

14Session  Laws  of  Illinois,  1836-1837,  p.  121. 

"Chicago  Daily  Democrat,  December  24,  1849.     Editorial. 

19Ibid.  It  is  interesting  to  note  that  the  legislature  which  passed  the 
Internal  Improvement  Act  is  regarded  as  the  strongest  legislature  ever 
convened  in  Illinois,  and  contained  such  men  as  Lincoln,  Logan,  Douglas, 
Bissell,  etc.  The  act  was  passed  to  a  large  extent  through  an  arrangement 
with  the  Springfield  delegation  by  which  the  state  capital  should  go  to 
that  city  in  return  for  the  passage  of  the  act  by  their  votes.  Cf.  chapters 
in  Moses,  Illinois  Historical  and  Statistical,  and  Davidson  and  Stuve, 
History  of  Illinois,  relating  to  the  Internal  Improvement  Act. 

"Session  Laws  of  Illinois,  1843-1844,  pp.  199,  200;  Newton,  Early 
Railway  Legislation  in  Illinois,  p.  33;  Ackerman,  Early  Illinois  Railroads, 
p.  9. 


20  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [304 

stand  this  act  it  is  necessary  to  go  back  six  years  to  March 
4th,  1837. 

On  that  date,  the  Cairo  City  and  Canal  Company  was  incor- 
porated with  power  to  hold  real  estate  in  Alexander  County, 
especially  the  tract  of  land  now  included  in  the  corporate  limits 
of  Cairo,  and  to  carry  on  general  industrial  enterprises.18  Mr. 
Darius  B.  Holbrook,  of  New  York,  one  of  the  incorporators  of 
the  Central  Railroad  of  1836,  was  elected  president,  and  for 
twenty  years  the  enterprise  was  dominated  by  his  masterful 
personality  until  the  two  became  synonymous.19  During  the 
prosperous  period  just  before  the  panic  the  company  borrowed 
between  two  and  three  million  dollars,  largely  from  English 
capitalists;  purchased  several  thousand  acres  of  land  at  the 
mouth  of  the  Ohio  River ;  established  industries  of  all  kinds ;  laid 
out  an  extensive  city  at  what  is  now  Cairo;  protected  it  by 
embankments  and  levees;  carried  on  a  general  mercantile  busi- 
ness; and  enacted  ordinances  for  the  government  of  the  citizens 
of  Cairo.20  However,  the  resources  of  the  company  were  not 
equal  to  the  demands  made  upon  it  and  the  failure  of  the  inter- 
nal improvement  policy  in  1840,  following  closely  after  the 
severe  panic  of  1837,  forced  the  enterprise  into  bankruptcy. 
English  investors  refused  further  financial  support  and  the 
stoppage  of  work  on  the  state  railroad  destroyed  the  undeveloped 
industries  at  Cairo.  The  directors  neglected  the  undertaking; 
the  property  in  and  near  Cairo  was  abandoned;  and  for  a  time 
the  place  was  occupied  only  by  squatters  and  disreputable  char- 
acters from  the  river  boats.21 

The  extreme  depression  existing  in  Illinois  after  the  panid 
of  1837  and  the  failure  of  the  state  policy  prevented  Mr.  Hol- 
brook from  doing  anything  with  the  Cairo  City  and  Canal  Com- 
pany until  1843.  Realizing  the  possibilities  of  the  "Central" 
railroad,  he  induced  the  legislature  to  pass  the  Great  "Western 
Railway  Act  of  that  year.  According  to  the  charter  the  presi- 

l*Session  Laws  of  Illinois,  1836-1837,  March  4,  1837.  The  powers 
granted  the  Cairo  company  by  the  legislature  were  almost  unlimited  and 
the  company's  acts  were  often  in  opposition  to  the  general  acts  of  the 
General  Assembly. 

19In  nearly  all  newspaper  references  to  the  Cairo  City  and  Canal  Xx>m- 
pany  it  is  referred  to  as  the  Holbrook  Company.  Mr.  Holbrook  was 
regarded  as  an  unscrupulous  promoter  and  was  thoroughly  disliked 
throughout  the  state. 

20Anon.,  History  of  Cairo,  Publications  of  the  Cairo  City  and  Canal 
Company;  Henry  Long,  History  and  Prospects  of  Cairo. 


305]  LAND   GRANT   AND   CHARTER  21 

dent  and  directors  of  the  Cairo  City  and  Canal  Company  were 
incorporated  as  the  Great  Western  Railway  Company  and  were 
given  authority  to  construct  a  railway  from  Cairo  to  the  .Illinois 
and  Michigan  Canal.22  In  many  ways  this  act  was  quite  favor- 
able to  the  state.  The  otherwise  worthless  grading  done  in  1837 
to  1840  was  to  be  purchased  at  a  fair  valuation;  twenty-five 
per  cent  of  the  net  receipts  from  operation,  after  a  twelve  per 
cent  dividend  had  been  paid  on  the  stock,  were  to  go  to  the 
state;  and  the  legislature  could  alter  the  charter  of  both  the 
Great  Western  Company  and  Cairo  City  and  Canal  Company 
after  all  the  indebtedness  of  the  former  was  paid.  But,  for  half 
a  dozen  years  the  Cairo  Company  had  been  known  as  a  flagrant 
example  of  speculative  and  corrupt  corporate  management,  and 
to  turn  over  to  such  a  company  the  most  important  industrial 
enterprise  within  the  state,  without  reasonable  compensation  or 
even  adequate  safeguards  as  to  the  completion  of  the  work,  was, 
to  say  the  least,  a  short  sighted  policy.  Moreover,  a  clause  was 
inserted  in  the  closing  section  of  the  act  surrendering  to  the 
company  any  public  lands  which  might  come  into  the  possession 
of  the  state  of  Illinois  during  the  life  of  the  charter.  Not  even  a 
guarantee  was  demanded  that  such  lands  should  be  used  for  the 
construction  of  the  railroad.  This  legislation  shows  the  wretched 
financial  condition  of  the  state  in  1843  and  illustrates  the  lack 
of  foresight  characteristic  of  the  General  Assembly  during  the 
period.23 

For  a  time  it  seemed  as  if  the  company  was  seriously  deter- 
mined to  proceed  with  the  "Central"  railroad.  Large  sums 
were  borrowed  and  expended  in  finishing  the  original  state  sur- 
veys and  completing  the  grading.  Numerous  buildings  were 
erected  at  Cairo,  and  an  extensive  system  of  levees  was  planned 
and  partially  constructed.24  But  conditions  were  not  favorable, 
and  the  company  could  not  obtain  capital  to  continue  the  work. 
Several  millions  had  already  been  expended  by  the  Cairo  com- 
pany without  dividend  paying  results;  all  Illinois  credit,  both 
state  and  private,  was  under  suspicion  on  account  of  the  partial 
repudiation  of  the  state  debt;  and  eastern  and  European  cap- 

22Session  Laws  of  Illinois,  1842-1843,  pp.  199  ff.  The  terms  of  the 
act  are  peculiar  and  this  provision  making  the  directors  of  one  company 
directors  of  another  is  typical  of  the  loose  charters  granted  by  state  legis- 
latures before  the  Civil  War.  Contrast  this  charter  with  the  charter  of 
February  10,  1851. 

23Session  Laws  of  Illinois,  1843-1844,  pp.  199  ff;  p.  203,  sec.  18. 

24Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  p.  10. 


22  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [306 

italists  refused  to  risk  further  investments  in  Illinois.25  Lack 
of  funds  stopped  all  construction  within  a  few  months  after 
the  charter  was  secured  and  the  directors  finally  gave  up  in 
despair.  On  March  3,  1845,  with  the  consent  of  the  company, 
the  charter  was  repealed  by  special  act  of  the  legislature;  all 
work  done  by  the  company  reverted  to  the  state  ;28  and  the  third 
and  most  promising  attempt  to  construct  the  "Central"  railroad 
ended  with  heavy  loss  to  the  promoters  and  no  profit  to  the 
state. 

The  failure  of  the  Great  Western  Railway,  following  closely 
upon  the  disastrous  Internal  Improvement  project  of  1837-1840, 
made  it  evident  to  the  legislature,  as  well  as  to  local  and  eastern 
capitalists,  that  under  the  depressed  condition  of  Illinois  credit, 
the  construction  of  this  important  and  expensive  railroad  was 
an  utter  impossibility  without  substantial  aid  from  the  national 
government.  As  a  result,  the  efforts  of  the  state  during  the 
seven  years  from  1843  to  1850  were  directed  almost  entirely 
towards  obtaining  such  support. 

Under  these  circumstances,  the  people  of  the  state  consid- 
ered themselves  fortunate  in  having  elected  to  the  Senate  of  the 
United  States,  in  1843,  Judge  Sidney  Breese,  who  was  regarded 
as  the  most  enthusiastic  advocate  of  the  "Central".  On  Decem- 
ber 23rd,  1843,  only  a  few  days  after  being  sworn  in  as  senator, 
he  introduced  into  Congress  a  memorial  of  the  Great  Western 
Company  praying  for  preemption  rights  to  a  portion  of  the 
public  lands  through  which  the  proposed  road  would  run.  Al- 
though profit  to  the  railroad  could  only  come  from  selling  the 
land  at  more  than  a  dollar  and  a  quarter  an  acre,  the  preemption 
price,  the  measure  met  with  such  indifference  and  opposition 
that  the  committee  on  public  lands,  to  which  the  memorial  was 
referred,  refused  to  report  a  bill.27 

26  Session  Laws  of  Illinois,  1844-1845,  March  3,  1845. 


21Sen.  /.,  December  23,  1843;  Ackerman,  Historical  Sketch  of  the 
Illinois  Central  Railroad,  p.  10.  As  Breese  was  elected  at  the  session  of 
the  legislature  which  passed  the  Great  Western  Act  of  March  6,  1843, 
containing  the  provision  turning  over  to  that  company  any  federal  lands 
the  state  might  receive,  and  immediately  after  taking  his  seat  in  the 
Senate  introduced  a  bill  granting  a  preemption  right  to  that  company,  it 
looks  as  if  there  might  have  been  some  understanding  between  him  and 
the  Cairo  Company.  Breese  was  always  a  warm  supporter  of  the  Cairo 
Company.  The  Cairo  City  and  Canal  Company  was  very  unpopular  in 
Illinois,  especially  among  the  people.  From  the  act  of  1836  on  Judge 
Breese  was  an  outspoken  advocate  of  this  company  and  believed  the 


307]  LAND   GRANT   AND   CHARTER  23 

Two  years  later,  Judge  Breese  was  appointed  chairman  of 
the  Committee  on  Public  Lands  and,  with  the  additional  pres- 
tige and  influence  of  that  position,  he  introduced  a  bill,  in  1846, 
granting  alternate  sections  of  public  land  to  the  Northern  Cross 
and  Central  railroads  of  Illinois.28  Breese  himself  had  little 
faith  in  a  direct  grant  of  land  and  did  not  push  the  project 
vigorously.  As  chairman  of  the  Committee  on  Public  Lands,  to 
which  all  these  bills  were  referred,  he  was  able  to  make  a  strong 
report  in  favor  of  his  proposal,  but,  for  some  reason,  the  bill 
was  not  brought  up  after  leaving  the  committee.29  Undismayed 
by  his  previous  lack  of  success,  he  again  introduced,  at  the 
second  session  of  the  twenty-ninth  Congress,  his  favorite  project 
of  a  preemption  grant.30  The  Committee  on  Public  Lands  advo- 
cated the  measure  in  a  vigorous  report,  which  ranks  among  the 
ablest  congressional  documents  on  the  land  question.  The  argu- 
ments advanced  in  favor  of  the  bills  were  convincing,  and  Sena- 
tor Breese  followed  up  his  report  by  active  work  on  the  floor 
of  the  Senate.  His  persistent  and  energetic  support  of  the  plan 
had  its  influence,  and  the  Senate  finally  passed  his  measure.31 
The  bill  went  to  the  House,  but  none  of  the  Illinois  delegation 
took  an  active  interest  in  it,  and  there  is  no  evidence  in  the 
House  records  that  an  attempt  was  made  to  secure  its  passage.32 

When  the  condition  of  political  affairs  at  the  time  is  con- 
sidered it  is  evident  that  Breese  was  contending  against  almost 
insurmountable  difficulties,  and,  although  his  proposals  met  with 
little  success,  he  must  be  given  great  credit  for  accustoming  the 
members  of  Congress  to  the  novel  project  of  granting  public 
land  to  assist,  directly  or  indirectly,  in  the  construction  of  pri- 
vate railroads.  His  reports  from  the  Committee  on  Public  Lands 

railroad  should  be  built  by  the  Great  Western  Company.  He  feared  a 
direct  grant  of  land  would  be  used  by  the  legislature  to  renew  the  Internal 
Improvement  policy  of  1837,  and  for  that  reason,  together  with  his  gen- 
eral support  of  the  Holbrook  corporations,  he  endeavored  to  get  a  right 
of  preemption  for  the  Great  Western.  The  Illinois  members  of  the  house 
desired  the  construction  of  the  central  railroad,  but  not  under  the  direc- 
tion of  Mr.  Holbrook.  There  are  no  grounds  to  question  Mr.  Breese's 
good  faith  in  his  advocacy  of  the  Holbrook  companies. 

^Congressional  Globe,  29  Cong.,  i  sess.,  p.  208;  Sanborn,  Congres- 
sional Grants  of  Land  in  Aid  of  Railways,  p.  25. 

29Ibid. 

^Congressional  Globe,  29  Cong.,  2  sess.;  Sanborn,  p.  26. 

31  Ibid.;  Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad, 
p.  10. 

"Ibid. 


24  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [308 

were  clear  and  logical  statements  of  the  arguments  in  favor  of 
congressional  aid.  He  lacked,  however,  the  political  prestige 
and  aggressive  personality  necessary  to  secure  the  assent  of  his 
colleagues  to  such  an  unusual  policy.  He  also  failed  in  securing 
the  support  of  the  Illinois  delegation  in  the  House,  and  complete 
success  was,  thus,  almost  impossible.33 

Fortunately  for  the  Central  project,  Stephen  A.  Douglas 
entered  the  United-  States  Senate  in  1847,  and  within  a  short 
time  became  the  recognized  leader  of  the  dominant  party  in  that 
body.  Like  Breese  he  was  an  ardent  advocate  of  a  railroad 
through  central  Illinois,  and  believed  that  the  federal  govern- 
ment should  assist  in  its  construction.  But  the  two  men  differed 
in  the  methods  to  be  adopted  by  the  government.  Breese  advo- 
cated conferring  the  right  of  preemption  upon  a  private  com- 
pany. Douglas  favored  a  direct  grant  of  land,  not  to  a  private 
corporation  but  to  the  state  of  Illinois.  In  this  position  he  was 
ably  seconded  by  the  Illinois  delegation  in  the  House  of  Repre- 
sentatives.3* 

At  the  commencement  of  the  long  session  of  1847-8,  each 
senator  introduced  a  measure  in  accordance  with  his  respective 
view.  Breese  presented  his  previous  plan  for  a  preemption 
right  to  the  Cairo  company  for  a  railroad  from  Cairo  to  Ga- 
lena.35 On  the  other  hand  his  colleague  advocated  a  direct  grant 
of  land  to  the  state  of  Illinois  to  be  used  in  building  a  first  class 
railroad  from  Cairo  to  Galena,  as  in  Breese 's  plan.  In  addition 
he  proposed  that  there  be  a  branch  from  this  "main"  line  to 
Chicago  ;36  in  effect  this  meant  a  trunk  line  from  the  Great  Lakes 
at  Chicago  to  the  Mississippi  River  at  Cairo.  By  his  plan 
whatever  profit  would  come  from  an  increased  value  of  the  land 
would  inure  to  the  benefit  of  the  state,  not  to  the  advantage  of 
a  private  corporation.  The  whole  plan  was  one  of  those  shrewd 
schemes  for  which  Douglas  was  famous.  From  an  ill-fated  and 
ill-managed  local  project  of  one  of  the  less  important  western 
states  the  Illinois  Central  became  a  national  enterprise. 

In  deference  to  his  colleague,  Judge  Breese  consented  to 
postpone  his  preemption  bill,  though  he  still  kept  it  on  the 
calendar  that,  as  he  said,  he  might  call  it  up  after  the  failure 

33Cf.  correspondence  between  Douglas  and  Breese  in  Appendix,  Early 
History  of  Illinois,  by  Sidney  Breese. 

^Congressional  Globe,  29  Cong.,  2  sess. 
35Ibid.,  30  Cong.,  i  sess. 


309]  LAND   GRANT   AND   CHARTER  25 

of  the  land  grant  measure.37  The  bill  introduced  by  Senator 
Douglas  was  reported  favorably  from  the  Committee  on  Public 
Lands,  and  was  made  a  special  order  on  May  3rd,  1848.  From 
that  time  its  passage  through  the  Senate  was  comparatively 
easy.  In  general  the  measure  was  supported  by  members  from 
the  western  states  and  opposed  by  representatives  of  the  eastern 
and  southern  states.38  Although  introduced  by  the  Democratic 
leader  of  the  Senate,  the  land  grant  received  much  better  sup- 
port from  the  Whigs  than  from  their  opponents.  As  distribu- 
tion of  the  public  lands  in  this  way  was  distinctly  a  Whig 
policy,  it  was  natural  that  the  minority  should  favor  the  bill. 
Moreover,  most  of  the  unoccupied  government  land  was  in  the 
West,  and  representatives  of  states  where  the  amount  was  large 
aided  the  measure  on  the  assumption  that  its  success  might 
mean  a  similar  grant  to  them  later  on.  Likewise  members  from 
the  eastern  states  opposed  this  new  policy  on  the  ground  that 
the  whole  nation  should  share  the  benefits  of  the  western  lands. 
Senators  and  representatives  from  the  southern  and  gulf  states 
were  strict  constructionists  and  opposed  Congressional  action 
which  would  assist  either  the  North  or  West  at  the  expense  of 
the  South.  Their  position  was  entirely  consistent  with  the  im- 
mediate interests  of  their  constituency.  After  the  fashion  of 
the  time,  most  of  the  speeches  defended  or  opposed  the  land 
grant  on  constitutional  grounds,  the  main  point  of  dispute  being 

37Breese  to  Douglas,  January  5,  1850,  quoted  in  Illinois  State  Journal, 
February  6,  1851 ;  Sanborn,  Congressional  Grants  of  Land  in  Aid  of  Rail- 
ways, p.  26. 

^Congressional  Globe,  30  Cong.,  i  sess.,  p.  314;  Appendix,  pp.  535, 
536,  537 ;  Sanborn,  Congressional  Grants  of  Land  in  Aid  of  Railways,  pp. 
26  ff.  The  vote  on  the  measure  in  the  House  and  Senate  was  distributed 
as  follows: 

FOR  AGAINST 

SENATE      HOUSE  SENATE      HOUSE 

New    England 2  10  35 

Middle 2  25  i  22 

South   27  3  31 

Gulf 43  34 

West  (land) 10  27  09 

West    (non-land) 41  i  8 

TOTAL  24  73  n  79 

Democrat 14  30  10  42 

Whig 10  43  i  37 


26  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [310 

whether  Congress  had  a  constitutional  right  to  give  away  the 
national  lands  in  aid  of  internal  improvements.39 

With  the  members  of  Congress  divided  along  the  lines  indi- 
cated above,  the  success  of  the  bill  depended  upon  the  relative 
strength  of  the  "West  as  opposed  to  the  East  and  South.  Al- 
though the  bulk  of  the  population  was  in  the  eastern  and  south- 
ern states  the  number  of  western  states  was  as  large  as  the 
number  of  eastern  states.  As  all  states  had  an  equal  repre- 
sentation in  the  Senate  the  passage  of  the  bill  was  comparatively 
easy,  the  final  vote  standing  twenty-four  for,  as  against  eleven 
opposed  to  the  bill.40  In  the  House,  however,  where  representa- 
tion was  in  proportion  to  population,  the  large  middle  and 
southern  states  were  able  to  defeat  the  act.  The  vote  was  close, 
and  had  some  of  the  western  members  supported  the  grant  more 
vigorously  it  would  probably  have  been  passed.  As  it  was,  the 
majority  against  it  was  only  seven.41  In  accordance  with  a  pre- 
vious understanding,  Judge  Breese  again  introduced  his  pre- 
emption bill  at  the  short  session,  and,  though  not  in  conformity 
with  the  views  of  Douglas,  the  latter,  as  a  personal  and  political 
favor  to  his  colleague,  allowed  it  to  pass  the  Senate,  with  the 
tacit  understanding  that  it  was  to  be  rejected  in  the  House  of 
Representatives.42 

In  the  six  years  since  Judge  Breese  introduced  his  first  pre- 
emption bill,  sentiment  in  both  the  Senate  and  House  had 
become  quite  favorable  to  some  kind  of  a  land  grant  or  pre- 
emption right  in  aid  of  the  Illinois  Central  Railroad.  Any 
measure  would  undoubtedly  be  of  considerable  value  to  the  state 
of  Illinois  or  to  private  parties  who  might  build  the  road,  and 
the  Cairo  City  and  Canal  Company  determined  to  make  use  of 
the  apparently  favorable  conditions.  Accordingly,  after  the 
failure  of  the  first  land  grant  bill  and  probably  in  anticipation 
of  greater  success  at  the  next  session,  the  Cairo  City  and  Canal 
Company  petitioned  the  legislature  for  a  renewal  of  their  pre- 

*9Congressional  Globe,  30  Cong.,  I  sess. ;  Appendix.  The  views  of  the 
members  of  Congress  are  gathered  from  speeches  in  the  Globe. 

^Congressional  Globe,  30  Cong.,  i  sess.,  p.  314. 

41Cf .  p.  18,  n.  38.  The  bill  was  refused  a  third  reading  by  vote  of  74- 
78  (73-79?)  Ho.  ].,  30  Cong.,  i  sess.,  p.  1270;  Congressional  Globe,  30  Cong., 
I  sess.,  p.  1071 ;  Sanborn,  Congressional  Grants  of  Land  in  Aid  of  Rail- 
ways, pp.  29,  30. 

*2Douglas  to  Breese,  letter  quoted  in  Illinois  State  Journal,  February 
6,  1851.  Cf.  correspondence  between  Breese  and  Douglas  in  Appendix  to 
Breese's  Early  History  of  Illinois. 


311]  LAND   GRANT   AND   CHARTER  27 

vipus  rights,  which  had  been  repealed  by  the  act  of  March  3rd, 
1845.  Although  the  Holbrook  companies  generally  were  disliked 
throughout  the  state,  they  represented  the  wealthiest  aggregation 
of  capital  in  Illinois,  and  apparently  were  the  best  able  to  com- 
plete the  Illinois  Central  Railroad.  In  recognition  of  this  fact 
the  legislature  on  February  10th,  1849  reincorporated  the  Great 
Western  Railway  Company,*3  with  all  its  former  privileges,  and, 
in  addition,  gave  it  outright  the  remains  of  the  old  state  surveys, 
gradings,  and  embankments,  and  a  right  of  way  two  hundred 
feet  wide  from  Cairo  to  Galena.44  The  surprising  feature  of  the 
act  is  that  the  legislature  included  in  the  charter  the  clause 
surrendering  to  the  company  whatever  lands  the  federal  govern- 
ment should  grant  the  state.  No  restriction  whatever  was  placed 
on  the  use  of  these  lands,  and,  so  far  as  the  charter  was  con- 
cerned, these  lands,  once  in  the  possession  of  the  corporation, 
might  have  been  used  for  the  personal  advantage  of  the  presi- 
dent or  directors.  Moreover,  the  only  condition  imposed  upon 
the  company  in  return  for  the  charter  was  that  it  should  spend 
at  least  $200,000  each  year  until  the  road  was  completed,  and 
even  this  condition  was  vague  and  ill  defined.45 

"With  this  remarkable  enactment  of  the  legislature  before 
them,  it  was  only  natural  that  members  of  Congress  should  hesi- 

43Session  Laws  of  Illinois,  1849-50,  February  10,  1849. 

"Ibid. 

45The  provision  in  the  acts  of  1843  and  1849,  granting  the  Great 
Western  Railroad  whatever  federal  lands  should  come  into  the  posses- 
sion of  the  state,  is  one  of  the  most  peculiar  ever  passed  by  an  Illinois 
legislature.  In  1843  there  was  little  prospect  that  the  national  government 
would  ever  turn  over  lands  to  Illinois  to  aid  in  railroad  construction,  but 
in  1849  several  bills  had  passed  the  Senate  and  one  had  passed  the  House 
giving  either  preemption  or  direct  grants  to  Illinois,  and  it  was  consid- 
ered almost  certain  the  3ist  Congress  would  pass  the  desired  legislation. 
It  is  very  probable  that  the  clause  was  inserted  in  both  acts  as  a  "joker" 
and  escaped  the  notice  of  the  members.  At  the  time  charters  were 
granted  giving  private  companies  almost  unlimited  powers  and  evidently 
this  is  an  example. 

At  the  same  time  it  is  very  likely  that  the  Cairo  City  and  Canal  Com- 
pany resorted  to  underhand  methods  to  secure  the  insertion  of  this  provi- 
sion. From  the  bitter  criticism  of  the  provision  in  1849  and  1850  after  the 
passage  of  the  federal  act,  especially  in  the  Springfield  Register  and  Jour 
nal,  two  of  the  leading  papers  in  the  state,  it  is  certain  this  clause  could 
not  have  been  inserted  with  the  open  approval  of  the  legislature.  The 
advantage  to  the  company  from  such  a  provision  is  too  obvious  to  require 
further  reasons  in  defence  of  the  attitude  of  the  company. 

The  action  of  the  Great  Western  Railroad  indicates  that  it  was  incor- 


28  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [312 

tate  to  give  to  Illinois  public  lands  which  might  be  turned  over 
to  a  speculative  private  corporation  without  materially  further- 
ing the  "Central"  railroad.  No  one  saw  this  more  clearly  than 
Senator  Douglas,  and,  even  before  the  first  session  of  the  thirty- 
first  Congress  opened,  he  made  vigorous  attempts  to  obtain  a  re- 
peal of  the  obnoxious  features  of  the  charter.  He  was  not  at  first 
successful,  but  his  colleagues  at  Washington  and  prominent  citi- 
zens of  the  state  assisted  him  and  just  before  Congress  convened 
he  was  able  to  induce  the  president  and  directors  of  the  Cairo 
City  and  Canal  Company  to  execute  a  release  of  the  charter  of 
the  Great  Western  Railroad  Company.  The  surrender  was  only 
conditional,  however,  and  the  Cairo  company  insisted  that  the 
release  should  be  accepted  at  the  next  session  of  the  legislature 
and  that  another  company  be  immediately  incorporated  to 
carry  on  the  project.46 

The  Great  Western  tangle  having  been  straigtened  out,  the 
Illinois  delegation  in  Congress  was  in  a  position  to  renew  their 
efforts  in  behalf  of  the  Illinois  Central  grant.  At  the  previous 
election  several  changes  were  made  in  the  personnel  of  the  dele- 
gation, which  gave  new  strength  to  the  advocates  of  a  direct 
grant.  In  the  Senate  Judge  Breese  was  succeeded  by  General 
Shields,  and  the  new  representatives  were  in  sympathy  with  the 
plans  of  Douglas.47  Judge  Douglas  was  an  able  politician,  as 

porated  with  the  object  of  securing  the  land  grant.  From  its  incorpora- 
tion until  the  passage  of  the  federal  land  grant  the  company  did  practically 
nothing.  Then  with  the  passage  of  the  Act  of  September  2oth  several 
thousand  dollars  were  expended  in  and  near  Cairo,  evidently  to  fulfill  the 
legal  requirements  of  the  charter.  For  a  full  discussion  of  this  matter, 
the  reader  is  referred  to  the  files  of  the  Journal  and  Register,  Springfield, 
during  the  Fall  and  Winter  of  1849.  (Illinois  Weekly  State  Journal, 
October  16,  1850.) 

4*Illinois  State  Journal,  October  16,  1850.  There  was  a  very  bitter 
fight  in  Illinois  over  the  release  of  the  charter  of  the  Great  Western 
Company.  The  Cairo  Company  was,  of  course,  reluctant  to  surrender  the 
charter,  and  they  were  supported  by  many  political  opponents  of  Douglas. 
The  company  obtained  considerable  aid  from  politicians  in  the  southern 
part  of  the  state,  but  was  almost  unanimously  opposed  by  the  central  and 
northern  parts  of  the  state.  The  two  Springfield  newspapers  were  the 
most  bitter  opponents  of  the  Hobrook  company.  Cf.  the  conflict  over  the 
passage  of  the  repeal  act  of  February  10,  1851.  In  October,  1850,  Mr.  Hoi- 
brook,  as  President  of  the  company,  executed  a  release,  but  Mr.  Douglas 
did  not  accept  it.  Cf.  correspondence  between  Breese  and  Douglas,  in 
Appendix  to  Breese's  Early  History  of  Illinois. 

47General  Shields  was  a  warm  personal  friend  of  Senator  Douglas, 
while  Senator  Breese  was  not  always  on  intimate  terms  with  him.  Shields 


313]  LAND   GRANT  AND   CHARTER  29 

well  as  a  statesman  of  national  prominence,  and  the  experience 
of  the  previous  session  showed  the  necessity  of  aggressive  action. 
As  a  matter  of  course,  the  friends  of  the  land  grant,  both  in  and 
out  of  Congress,  secured  a  large  number  of  memorials  and  peti- 
tions requesting  definite  action  by  the  federal  government.48 
In  addition,  Senator  Douglas  resorted  to  various  political  bar- 
gains to  insure  complete  success  of  his  policy.  In  the  previous 
session  he  had  added  to  his  plan  a  branch  from  the  proposed 
main  line  of  the  railroad  to  Chicago,  and  thus  made  the  enter- 
prise one  which  appealed  to  the  interests  of  many  eastern  repre 
sentatives.49  In  his  plans  for  the  thirty-first  Congress  he  made 
the  railroad  even  more  comprehensive.  He  extended  the  pro- 
posed grant  to  the  Mobile  and  Ohio  Railroad,  which  was  then 
endeavoring  to  get  a  foothold  in  southern  Alabama,  and  to 
certain  other  southern  roads.  A  trunk  line  from  Chicago  to 
Mobile  was  a  project  which  appealed  to  the  imagination  of  the 
people  of  the  entire  Mississippi  valley ;  even  the  strict  construc- 
tionists  had  to  admit  it  was  a  matter  of  more  than  state  impor- 
tance. At  the  same  time,  the  southern  part  of  the  plan  removed 
the  opposition  of  the  gulf  states  and  secured  the  active  support 
of  certain  northern  members  who  were  very  much  interested  in 
the  Mobile  and  Ohio  Railroad.80  He  also  removed  the  opposition 
of  certain  New  England  and  Pennsylvania  Congressmen  by  a 
compromise  on  the  tariff.  Douglas  cared  very  little  about  new 

was  also  one  of  the  most  popular  politicians  in  Illinois.  Among  the  lead- 
ing supporters  of  the  measure  were  Representatives  Bissell,  Baker,  and 
Wentworth  of  Illinois. 

48Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  p.  17. 
Wentworth,  Congressional  Reminiscences  (Fergus  Historical  Series). 

49The  addition  of  the  Chicago  branch  is  interesting  as  showing  the 
increased  importance  of  northern  Illinois  and  the  district  around  Chicago. 
In  the  early  plans  the  northeastern  part  of  the  state  was  neglected  and 
this  addition  by  Douglas  is  a  recognition  of  the  changes  which  took  place 
in  the  previous  fifteen  years.  Senator  Douglas  was  accused  of  making 
the  change  in  order  to  increase  the  value  of  Chicago  real  estate,  in  which 
he  was  deeply  interested.  There  may  be  some  truth  in  the  statement,  but 
it  also  shows  that  he  recognized  the  future  importance  of  Chicago.  The 
entire  success  of  the  Illinois  Central  has  depended  upon  the  Chicago 
branch,  and  if  this  extension  had  not  been  made,  the  road  would  have 
become  a  merely  local  undertaking. 

80Sanborn,  Congressional  Grants  of  Land  in  Aid  of  Railways,  p.  31 ; 
Breese  to  Douglas,  Illinois  State  Journal,  February  6,  1851 ;  Wentworth, 
Congressional  Reminiscences  (Fergus  Historical  Series). 


30  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [314 

tariff  legislation,  while  the  eastern  representatives  were  not 
interested  in  the  land  grant,  but  did  desire  a  change  in  the  tariff. 
A  compromise  was  easy  and  the  eastern  Congressmen  agreed  to 
support  the  Illinois  Central  measure  in  return  for  active  efforts 
on  the  part  of  the  western  members  in  favor  of  a  change  of 
tariff.51  A  third  agreement,  though  of  less  importance  than  the 
other  two,  was  arranged  late  in  the  session  by  which  Dunleith, 
opposite  Dubuque,  Iowa,  instead  of  Galena,  became  the  northern 
terminus  of  the  proposed  road.52  These  various  agreements  and 
compromises  materially  strengthened  the  Illinois  delegation 
and  made  the  passage  of  the  land  grant  act  a  practical  certainty. 
A  few  days  before  the  second  release  was  executed  Senator 
Douglas  introduced  in  the  Senate  a  bill  granting  to  Illinois 
alternate  sections  of  public  land  for  six  miles  on  each  side  of  a 
proposed  railroad  from  Cairo  to  Galena  and  from  Chicago  to  a 
junction  with  the  main  line.63  With  the  consent,  and  probably 
at  the  suggestion  of  the  Illinois  Senators,  King  of  Alabama 
added  an  amendment  making  a  similar  grant  to  the  states  of 
Mississippi  and  Alabama,54  and  a  little  later  Senator  Dodge  of 
Iowa  made  another  amendment  extending  the  road  to  Dun- 

"Wentworth,  Congressional  Reminiscences  (Fergus  Historical  Series). 
Among  the  eastern  members  secured  by  this  agreement  were  Daniel 
Webster  and  Mr.  Ashmun  of  Massachusetts.  It  is  very  likely  that  the 
Boston  and  New  York  capitalists  who  built  the  Illinois  Central  were 
deeply  interested  in  the  success  of  the  land  grant  act.  Mr.  Rantoul,  one 
of  the  leading  promoters,  was  a  close  personal  friend  of  the  two  gentle- 
men named  above,  'and  succeeded  Mr.  Webster  in  the  Senate.  Mr.  Ash- 
mun was  also  interested  in  the  Illinois  Central,  and  the  town  of  that  name 
on  the  charter  line  is  named  after  him. 

"Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  p.  17. 
Senator  Dodge,  of  Iowa,  is  credited  with  being  the  originator  of  this 
extension.  The  change  was  bitterly  opposed  by  Galena  and  was  instru- 
mental in  causing  the  decline  of  that  city.  Two  railroads  were  being  pro- 
jected from  Dubuque  in  1849,  one  of  them,  the  present  Dubuque  &  Sioux 
City  Railroad  and  the  extension  to  Dunleith,  made  possible  a  through  line 
from  Chicago  and  Cairo  to  central  Iowa.  The  change,  although  of  great 
importance  to  the  Illinois  Central,  attracted  little  attention  in  Congress. 

™Sen.  /.,  31  Cong.,  i  sess. 

^Congressional  Globe,  31  Cong.,  i  sess.,  p.  845.  It  should  be  noticed 
that  the  Act  of  September  20,  1850  makes  grants  of  land  to  the  three 
states  of  unoccupied  government  land  inside  the  state  limits  to  be  used  in 
building  a  railroad  inside  the  state.  This  is  due  to  the  strict  construc- 
tionist  views  of  the  Democratic  majority  of  Congress.  Cf.  the  Union 
Pacific  Land  Grant  Act. 


315]  LAND   GRANT   AND   CHARTER  31 

leith.55  With  these  amendments  securing  the  support  mentioned 
on  the  previous  pages  the  passage  of  the  bill  thrpugh  the  Senate 
was  comparatively  easy  and  the  measure  was  approved  by  a 
vote  of  26-14.  The  real  opposition  came  in  the  House,  but  the 
Illinois  delegation,  under  the  leadership  of  Bissell,  McClernand, 
and  Wentworth,  forced  the  Senate  bill  through  the  lower  house. 
At  times  the  opposition  was  extremely  bitter,  and  it  was  only 
by  the  various  agreements  effected  in  the  early  part  of  the  ses- 
sion that  the  act  secured  sufficient  votes  to  be  passed.  Finally, 
a  vote  was  taken,  and  the  bill  passed58  the  House  of  Representa- 
tives by  a  majority  of  twenty-five,  the  vote  taking  place  on  the 
17th  of  September.  Three  days  later,  President  Fillmore  signed 
the  bill  and  the  construction  of  the  Illinois  Central  was  assured 
so  far  as  the  United  States  Congress  was  concerned.57 

By  the  terms  of  this  act  alternate  sections  six  miles  on  each 
side  of  the  proposed  railroad  were  given  to  the  states  of  Illinois, 
Mississippi  and  Alabama  to  construct  a  railroad  from  Chicago 
to  Mobile.  The  act,  as  it  related  to  Illinois,  provided  for  a  railroad 
' '  from  the  southern  terminus  of  the  Illinois  and  Michigan  Canal 
to  a  point  at  or  near  the  junction  of  the  Ohio  and  Mississippi 
rivers,  with  a  branch  of  the  same  to  Chicago  on  Lake  Michigan, 
and  another,  via  the  town  of  Galena,  in  said  state,  to  Dubuque, 
in  the  state  of  Iowa."58  The  land  in  alternate,  even  numbered, 
sections  for  six  miles  on  both  sides  of  this  road  was  given  to  the 
state  to  assist  this  undertaking,  but  with  the  provision  that  the 
road  should  be  completed  within  ten  years  and  that  if  this  were 
not  done  all  unsold  lands  should  revert  to  the  federal  govern- 
ment and  the  state  should  pay  to  the  United  States  whatever 
it  had  received  for  land  already  sold.  Furthermore,  the  road 
should  be  a  public  highway,  free  of  toll,  or  other  charges,  for 
the  transportation  of  any  property  or  troops  of  the  United 

55Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  p.  17. 

56The  vote  on  the  land  grant  bill  was  as  follows : 

FOR  AGAINST 

SENATE      HOUSE  SENATE      HOUSE 

New  England i  10  4  II 

Middle   2  28  4  22 

South   28  3  23 

Gulf 5  13  II 

West  (land) 13  34  I  12 

West    (non-land) 38  17 

TOTAL  26  101  14  76 

6Tf7.  S.  'Statutes  at  Large,  ix,  466. 


32  HISTORY  OP   ILLINOIS   CENTRAL  RAILROAD  [316 

States;  Congress  was  to  decide  what  compensation  should  be 
given  for  carrying  the  mails.  To  compensate  for  the  loss  of  land 
Congress  ordered  that  the  alternate,  odd  numbered,  sections  six 
miles  on  either  side  of  the  road,  belonging  to  the  government, 
should  be  sold  at  $2.50  per  acre,  instead  of  $1.25  as  previously. 
Lands  already  settled  were  to  be  retained  by  the  settlers  upon 
payment  to  the  state  of  the  preemption  price,  or  the  latter  could 
recompense  itself  by  taking  other  unoccupied  land  within  fifteen 
miles  of  the  road.59  The  land  could  never  be  used  for  any 
purpose  other  than  the  construction  of  the  road. 

The  passage  of  the  land  grant  act  of  September  20th  marks 
an  epoch  in  the  history  of  Illinois.  At  last,  after  years  of  dis- 
couragement and  failure,  the  state  had  in  sight  the  means  neces- 
sary to  build  the  Illinois  Central  Railroad.  To  even  the  most 
conservative  citizen,  three  million  acres  of  land  seemed  sufficient 
to  guarantee  the  construction  of  the  road.  The  more  sanguine 
looked  forward  to  the  time  when  the  central  counties  of  the  state 
would  be  thickly  settled  and  the  land  grant  had  paid  off  all  of 
the  burdensome  Internal  Improvement  Debt.  Senator  Douglas 
and  the  other  representatives  in  Congress  who  had  secured  the 
grant  were  applauded  from  Cairo  to  Galena ;  mass  meetings  and 
banquets  were  held  in  their  honor;  and  every  means  was  taken 
to  show  the  popular  appreciation  of  their  services.60  The  influ- 
ence on  the  general  credit  of  Illinois  was  great  as  was  shown  by 
a  rise  of  several  points  in  the  internal  improvement  stock.61 

The  mere  passage  of  the  federal  act, was  the  least  difficult 
of  the  many  problems  confronting  the  friends  of  the  Illinois 
Central.  For  some  fourteen  years  the  questions  connected  with 
this  railroad  had  been  before  the  legislature  and  the  citizens  of 

™U.  S.  Statutes  at  Large,  IX,  46. 

60Ackerman,  Early  Illinois  Railroads,  p.  35.  On  their  return  to  Illinois 
at  the  close  of  the  session,  Mr.  Douglas  and  Gen.  Shields  were  tendered 
a  public  dinner  by  the  citizens  of  Chicago,  in  consideration  of  their  serv- 
ices in  obtaining  the  passage  of  this  act  In  declining  the  honor,  they  mod- 
estly awarded  to  their  colleagues  in  the  house  the  full  measure  of  credit 
for  having  successfully  carried  the  bill  through  to  completion. 

81"The  New  York  Evening  Post  of  the  i8th  inst.  says :  A  considerable 
advance  has  been  obtained  in  Illinois  Internal  Improvement  stock :  55^ 
was  bid  for  it  this  morning  and  60  asked.  This  is  a  rise  of  five  to  ten  per 
cent  and  is  due  to  the  advising  obtained  this  morning  from  Washington 
of  the  donation  by  congress  of  lands  in  Illinois  in  aid  of  the  railroad  con- 
structed between  Chicago  and  Mobile,  which  runs  through  the  whole  state 
of  Illinois — also  of  the  swamp  land  measure."  Illinois  Daily  Register, 
September  30,  1850. 


317]  LAND   GRANT   AND   CHARTER  33 

the  state,  and  now  that  success  was  probable,  all  the  previous 
conflicts  were  renewed  with  additional  strength.  The  most 
troublesome  of  these  involved  the  method  of  construction  and 
the  route. 

There  were  four  possible  ways  of  utilizing  the  land  grant, 
each  of  which  had  its  vigorous  adherents:  (1)  State  construc- 
tion of  the  railroad  by  means  of  the  grant,  along  the  line  of  the 
internal  improvement  plan  of  1837;  (2)  Surrender  of  the  grant 
to  the  bondholders  and  construction  by  them  on  terms  similar 
to  those  made  by  the  holders  of  canal  bonds  in  1840;  (3)  Com- 
pletion by  the  Great  Western  Railway  Company  under  its  char- 
ter of  1849,  including  the  retention  of  all  state  lands;  (4)  Crea- 
tion of  an  entirely  new  private  corporation  and  the  transfer  to  it 
of  the  land  grant  under  certain  restrictions  and  with  certain  pay- 
ments to  the  state ;  this  company  to  assume  entire  responsibility 
for  the  completion  of  the  road. 

To  many  citizens  state  construction  of  the  Illinois  Central 
still  seemed  a  feasible  project.  From  1831  to  1843  the  various 
plans  for  the  railroad  depended  on  government  support,  and, 
despite  the  collapse  of  the  Internal  Improvement  plan  of  1837, 
there  was  considerable  talk  of  direct  construction  by  the  legis- 
lature. The  cost  of  building  the  road  was  underestimated,  while 
the  value  of  the  land  was  overestimated.  It  was  expected  that 
the  road  could  be  built  without  recourse  to  bond  issues  and  it 
was  thought  that  the  profits  from  operation  would  then  quickly 
retire  the  old  state  debt.62  But  the  panic  of  1840  and  the  de- 
pressing influence  of  the  debt  were  still  vivid  in  the  minds  of 
the  citizens  of  Illinois,  and  they  generally  condemned  any  fur- 
ther attempt  by  the  state.  As  Senator  Shields  said: — "capital- 
ists will  not  embark  in  this  enterprise  unless  they  have  the 
control  of  the  servants,  agents,  etc.  ...  in  a  word  of  the 
construction  and  management  of  the  road. '  '63 

Another  form  of  semi-legislative  management  was  contained 
in  the  so-called  "bond-holders'  plan",  which  was  submitted  to 
the  legislature  in  January,  1851.  As  a  result  of  the  various 
attempts  at  internal  improvement  Illinois  had  accumulated  a 
debt  of  some  fifteen  million  dollars  and  was  unable  to  meet  the 

62For  instance,  Mr.  John  S.  Wright,  of  Chicago,  published  a  pamph- 
let in  which  he  took  the  ground  that  the  grant,  being  of  such  immense 
value,  the  State  should  hold  the  lands  and  again  attempt  the  construction 
of  the  road.  Ackerman,  Early  Illinois  Railroads,  p.  35. 

63Speech  of  General  Shields,  Springfield,  111.,  November  20,  1850,  given 
in  full  in  Illinois  Weekly  Journal,  November  20,  1850. 


34  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [318 

full  interest  charges.  In  fact,  the  state  had  barely  escaped  re- 
pudiation or  bankruptcy,  and  the  bondholders  supposed  it  would 
be  utterly  incapable  of  attracting  the  capital  necessary  to  con- 
struct the  Illinois  Central.  Under  the  circumstances,  certain 
eastern  bondholders  suggested  an  arrangement  somewhat  sim- 
ilar to  the  one  under  which  the  Illinois  and  Michigan  Canal  was 
built.  A  company,  composed  largely  of  bondholders,  was  to 
be  chartered  and  given  power  to  construct  the  railroad.  Three 
dollars  of  bonds  or  four  dollars  of  stock,  entitled  new  internal 
improvement  stock,  were  to  be  given  for  each  dollar  of  cash  paid 
in.  The  state  was  to  receive  stock  at  par  to  an  amount  equal 
to  the  value  of  the  lands  sold,  and  in  return  pay  all  expenses  of 
surveys,  etc.  The  stock  belonging  to  the  state  must  be  set  apart 
to  retire  the  state  debt.  The  stock  of  the  new  company  could 
also  be  made  the  basis  for  state  banking.64  On  the  whole,  the 
terms  were  about  as  onerous  as  could  be  imposed  on  a  bankrupt 
state,  and  they  are  in  striking  contrast  to  the  Illinois  Central 
charter  of  1850.  It  is  impossible  to  state  just  what  men  were 
behind  the  scheme,  as  it  was  disowned  by  many  leading  bond- 
holders. The  project  never  received  serious  attention  from  either 
the  newspapers  or  the  legislature.65 

The  proposed  construction  by  the  Great  Western  Railroad, 
or  in  other  words  by  Mr.  Holbrook  and  the  Cairo  City  and  Canal 
Company,  attracted  much  more  attention  than  either  of  the  other 
two  plans.  In  1849,  as  already  mentioned,  the  legislature  re- 
newed the  charter  of  the  Great  Western,  including  a  grant  to 
the  company  of  whatever  lands  the  state  might  receive  from 
the  federal  government.  Then,  in  December,  1849,  the  directors, 
under  pressure  from  Senator  Douglas,  executed  a  release  of  both 
the  charter  and  the  grant,  on  condition  that  the  legislature  would 
accept  the  same  at  its  next  session  and  incorporate  another  com- 
pany to  carry  on  the  enterprise.  The  charter  of  1849  was  evi- 
dently obtained  with  the  distinct  object  of  securing  the  federal 
land  grant,  and  no  work  was  done  on  the  railroad  until  it  was 
almost  certain  that  congress  would  pass  the  act.  Then,  construc- 
tion work  was  started,  and  it  was  stated  that  large  quantities  of 
rails  were  purchased  in  England.  At  the  same  time,  active 

64A  copy  of  the  bill  presented  by  the  bondholders  is  given  in  the 
Chicago  Daily  Democrat,  January  n,  1851,  and  a  summary  is  given  in  the 
Illinois  Weekly  Journal,  January  29,  1851.  Cf.  Ackerman,  Early  Illinois 
Railroads,  p.  37,  n. 

"Editorial  in  Illinois  Weekly  Journal,  January  29,  1851 ;  ibid.,  Jan- 
uary 22. 


319]  LAND   GRANT   AND   CHARTER  35 

efforts  were  made  to  defeat  any  bill  repealing  the  charter.  It  is 
uncertain  Whether  this  company  intended  to  carry  on  the  under- 
taking, or,  as  Senator  Douglas  alleged,  merely  sell  the  charter 
in  Europe.  At  any  rate,  the  opposition  to  the  Great  Western, 
especially  in  the  southern  part  of  the  state,  was  bitter  and  deep 
seated.66 

The  last  plan  was  to  turn  over  the  grant  under  proper  re- 
strictions to  a  private  corporation,  other  than  the  Cairo  City 
and  Canal  Company.  The  memorial  of  the  Boston  capitalists, 
who  later  built  the  road,  was  the  first  direct  proposition  of  the 
kind,  but  it  is  probable  that  the  memorialists  had  early  sug- 
gested a  similar  plan  to  the  leading  legislators  of  the  state.  In  all 
probability,  other  capitalists  were  also  deeply  interested  in  the 
railroad.  However,  there  was  no  definite  project  of  the  kind 
before  the  people  during  November  and  December,  1850.6T 

More  troublesome  than  the  method  of  construction,  though 
of  less  real  importance,  was  the  matter  of  route.  When  Lieu- 
tenant Governor  Jenkins  made  his  proposal  in  1832,  it  was  for 
a  railroad  from  Cairo  to  Peru  at  the  junction  of  the  canal  and 
the  Illinois  river.  In  the  internal  improvement  act  Galena  was 
made  the  northern  terminus  and  the  route  was  more  distinctly 
marked;  it  included  Vandalia,  Shelbyville,  Decatur,  Blooming- 
ton,  and  Savannah.  This  line  was  retained  in  the  charters  of 
1843  and  1849,  and  in  the  various  bills  introduced  into  the  fed- 
eral Senate  by  Sidney  Breese.  But  Judge  Douglas,  in  his  bills 
of  1847  and  1849,  radically  altered  the  route  by  extending  the 
road  to  Dunleith  and  making  a  branch  to  Chicago.  As  a  result, 
the  whole  question  of  route  was  reopened,  and  every  city  and 
county  of  importance  in  the  central  part  of  the  state  asserted  its 
claims.  The  contests  over  the  Chicago  and  Dunleith  branches 
were  especially  strenuous,  and  the  continued  discussion  resulted 
in  greater  confusion.  The  decision  was  necessarily  left  to  the 
legislature  and  by  them  transferred  to  the  company.68 

Congress  passed  the  land  grant  act  in  September,  1850,  and 
the  legislature  was  elected  the  following  November.  On  account 

66This  opposition  to  the  Holbrook  companies  is  evident  in  the  news- 
paper discussion  of  the  time. 

8TNone  is  given  in  any  of  the  important  state  papers  and  if  any  project 
were  before  the  people  it  would  be  given  in  the  newspapers. 

^Illinois  Weekly  Journal,  January  22,  1851 ;  also  numerous  articles  in 
Chicago  Daily  Democrat,  Illinois  Weekly  Journal,  Illinois  Daily  and 
Weekly  Register  during  October,  November,  and  December,  1850,  and 
January,  1851. 


36  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [320 

of  the  release  of  the  Great  "Western  charter  it  was  necessary  to 
settle  the  matter  at  the  first  session  of  the  General  Assembly,  and, 
consequently,  the  selection  of  proper  representatives  and  sen- 
ators was  of  vital  importance.  As  soon  as  it  became  evident  that 
the  federal  House  of  Representatives  would  act  favorably  on 
Senator  Douglas'  bill,  the  advocates  of  state  construction  and 
the  friends  and  opponents  of  the  Cairo  City  and  Canal  Company 
commenced  an  active  campaign  to  secure  a  majority  of  the  mem- 
bers of  the  legislature.  Other  state  issues  were  consigned  to 
the  background  and  the  question  of  the  land  grant  and  the 
acceptance  of  the  Great  Western  Release  were  the  important 
factors  in  the  election  of  members  to  the  sixteenth  General 
Assembly.  The  newspapers  of  the  state  had  numerous  editorials 
and  contributed  articles  defending  or  opposing  the  respective 
plans,  or  emphasizing  the  importance  of  one  route  over  another. 
Mass  meetings  and  conventions  were  held  at  various  points  along 
the  line  of  the  proposed  railroad,  and  the  excitement  often  was 
at  fever  heat.  By  November  the  controversy  had  become  bitter 
and  personal.  Individual  motives  were  impugned;  the  charac- 
ter of  some  of  the  leading  newspaper  editors,  of  Mr.  Holbrook, 
Senator  Douglas,  Judge  Breese,  and  others,  was  maligned;  and 
charges  of  bribery  and  fraud  were  frequent.  By  the  time  the 
legislature  convened  in  January,  the  whole  discussion  had  degen- 
erated into  a  typical  Illinois  political  fight.  On  the  whole,  the 
opponents  of  both  state  ownership  and  of  the  Holbrook  com- 
pany had  much  the  better  of  the  argument.  Only  a  few  news- 
papers, such  as  the  Benton  Standard  and  the  Cairo  Times,  and 
a  few  politicians,  the  most  prominent  of  them  being  Sidney 
Breese,  openly  defended  the  Cairo  City  and  Canal  Company  or 
its  subsidiary  company,  the  Great  Western.  However,  the  Great 
Western  was  already  in  possession  of  the  desired  charter  and, 
conditionally,  of  the  land  grant.  Thus,  inaction  on  the  part  of 
the  legislature  meant  success  for  the  Holbrook  party,  and  the 
Cairo  City  and  Canal  Company  exerted  every  effort  to  block 
legislation  and  prevent  the  incorporation  of  a  rival  company. 
On  account  of  the  many  minor  fights  it  was  not  at  such  a  disad- 
vantage as  was  indicated  by  newspaper  editorials.69 

69The  following  are  the  most  important  references  to  the  conflict 
between  the  two  factions :  Illinois  Daily  Register,  October  30,  1850 ;  Illi- 
nois Weekly  Journal,  January  22,  29,  1851 ;  Illinois  Daily  Register,  Novem- 
ber 8,  1850;  December  12,  1850;  ibid.,  October  17,  1850;  ibid.,  October  10, 
1850;  ibid.,  October  9,  1850;  Illinois  Weekly  Journal,  November  13,  1850; 
ibid.,  November  6,  1850;  ibid.,  October  30,  1850;  ibid.,  October  16,  1850; 


321]  LAND   GRANT   AND   CHARTER  37 

Most  of  the  plans  had  been  thoroughly  discussed  during 
the  campaign,  and,  when  the  legislature  met  the  first  day  of 
January,  1851,  its  members  were  well  acquainted  with  the  main 
points  at  issue.  In  the  organization  of  the  House  the  Holbrook 
faction  secured  a  temporary  advantage  by  the  election  of  Judge 
Breese  as  speaker,  and  during  the  first  two  weeks  of  the  session 
they  were  strong  enough  to  prevent  radical  action.  Bills  were 
presented  in  both  houses  repealing  the  charter  of  the  Great 
Western,  but  both  were  strongly  opposed.  The  senate  passed  a 
bill  concerning  the  Illinois  Central,  which  did  not  accept  the 
release  of  the  Holbrook  company ;  the  house  passed  a  bill  accept- 
ing the  release  and  refused  to  adopt  the  senate  measure.70  A 
large  majority  of  the  members  of  each  body  favored  the  repeal  of 
the  Great  Western  charter,  but  until  a  more  reasonable  propo- 
sition was  presented  many  preferred  to  retain  the  Cairo  com- 
pany rather  than  to  be  entirely  without  a  means  of  building  the 
road. 

At  this  stage  of  the  contest  affairs  were  entirely  altered  by  a 
businesslike  memorial  presented  by  Mr.  Robert  Eantoul  of  Mas- 
sachusetts, acting  in  the  interest  of  a  group  of  wealthy  New 
York  and  Boston  capitalists.  In  brief,  the  plan  of  the  memorial- 
ists was  as  follows: —  The  legislature  should  create  a  corpora- 
tion and  surrender  to  it  the  federal  land  grant.  In  return  the 
incorporators  agreed  to  build  a  railroad  "equal  in  all  respects 
to  the  railroad  running  between  Boston  and  Albany,  with  such 
improvements  thereon  as  experience  has  shown  to  be  desirable 

Chicago  Tribune,  October  22,  1851  ;  Illinois  Weekly  Journal,  January  22, 
1851 ;  Illinois  Daily  Register,  October  23,  1850;  ibid.,  November  20,  1850. 

As  the  leading  advocate  of  the  "Central"'  Senator  Douglas  had  endeav- 
ored to  secure  an  early  acceptance  of  the  release  and  continually  urged  such 
action  from  the  time  he  received  the  final  release  of  the  Great  Western. 
Even  as  early  as  October,  1849,  he  had  attempted  to  obtain  action  by  the 
legislature,  but  without  success  (Illinois  Daily  Journal,  October  31,  1849). 
The  matter  was  brought  up  at  the  special  session  and  Representative 
Denny  introduced  a  resolution  "that  the  committee  on  internal  improve- 
ments be  instructed  to  inquire  into  the  expediency  of  so  altering  and 
amending  or  repealing  the  charter  of  the  Great  Western  Railway  as  in 
their  judgment  will  be  best  calculated  to  promote  the  interests  of  the 
state.  .  .  ."  (Illinois  Daily  Journal,  October  31,  1849).  The  discussion 
was  at  times  very  heated,  but  the  policy  of  inaction  finally  prevailed,  it 
being  thought  that  the  matter  could  rest  until  the  regular  session  of  1851. 
(Illinois  Daily  Journal,  October  24,  1849). 

70Illinois  Daily  Register,  January  15,  1851 ;  also  Sen.  J.  and  Ho.  J ., 
January  1-15,  1851. 


38  HISTORY  Or  ILLINOIS   CENTRAL   RAILROAD  [322 

and  expedient  ;  to  complete  the  road  by  July  4,  1854  ;  and  to  pay 
the  state  _  per  cent  of  the  gross  receipts  in  return  for  the 
land."71  The  memorialists  were  men  of  considerable  capital  and 
experience  with  railroad  promotion  in  other  parts  of  the  country. 
On  the  whole,  they  made  a  much  more  favorable  offer  than  could 
have  been  expected.  The  Governor  recommended  the  accept- 
ance of  their  proposition  in  a  special  message,  and  most  of  the 
members  of  the  legislature  and  friends  of  the  Illinois  Central 
believed  that  this  memorial  was  a  first  class  opportunity  for  the 
state.  This  is  illustrated  by  the  following  quotation  from  the 
Illinois  Weekly  Journal,  "We  agree  with  the  legislature  that 
'this  company  are  seeking  no  advantages,  and  that  their  object 
is  to  build  the  road  without  loss  to  themselves  and  with  advan- 
tage to  the  state.'  "" 

Coincident  with  the  transmission  of  this  memorial  Mr. 
A«fc**i  Gridley  introduced  in  the  senate  a  bill  "for  an  act  to 
incorporate  the  Illinois  Central  Railroad."73  On  February  5th 
Mr.  J.  L.  D.  Morrison  offered  a  substitute  for  the  original  bfll,T4 
and  on  the  next  day  it  passed  by  a  vote  of  23  to  3.T5  Four  days 
later  it  passed  the  house  by  an  almost  unanimous  vote  of  seventy- 
two  to  two/"  and  was  immediately  signed  by  Governor  French/7 

The  passage  of  the  charter  through  both  houses  was  not  as 
easy  as  the  vote  seems  to  indicate.  Shortly  after  the  receipt  of 
the  memorial  the  whole  matter  was  referred  to  a  committee, 
whose  members,  in  connection  with  Mr.  Hantoul  and  Colonel 
BisselL  representatives  of  the  promoters,  spent  considerable  time 
in  preparing  the  measure.  As  the  duration  of  the  session  was 
limited  to  forty  days,  the  Holbrook  interests  made  every  effort 
to  delay  the  bffl,  and  during  the  last  week  of  January  and  the 
first  of  February  it  looked  as  if  their  efforts  would  meet  with 


the  copy  of  the  memorial  given  in  the  Appendix.  In  the 
original  mtmn'al  the  amount  paid  to  the  state  was  left  vacant.  It  was 
proposed  in  the  House  that  ten  per  cent  be  given,  bat  the  company,  through 
the  efforts  of  Robert  Rantoul  and  Representative  Bissefl,  managed  to 
reduce  the  amount  to  seven  per  cent.  The  real  reasons  for  the  action  of 
the  legislature  in  this  •attri  are  not  known,  and  in  his  campaign  for 
election  as  governor.  Colonel  Bissefl  was  accused  of  having  obtained  the 
reduction  to  the  disadvantage  of  the  state. 

nIUmois  Weekly  Jonrxal,  January  22,  1851. 

^Ackerman,  Early  Illinois  Railroads,  p.  39. 


T*IUixois  Weekly  Journal,  February  12,  1851.    Sen.  J.  and  Ho.  J. 

nlbid. 

•"Ibid. 


323]  LAND   CTLAXT  AXD   CHASTE*  39 

success.  At  last,  as  noted  above,  the  bill  was  passed  by  both 
houses  only  a  few  days  before  the  close  of  the  session.  The  main 
difficulty  came  in  the  selection  of  a  route,  and  the  legislature 
was  finally  forced  to  leave  the  exact  location  of  the  road  to  the 
incorporators.78  The  other  point  of  conflict  was  Ike  prmiitipr 
to  be  paid  the  state.  This  was  finally  fired  at  seven  per  cent 
of  the  gross  receipts,  but  the  company  was  exempted  from  paying 
any  state  or  local  taxes. 

As  passed,  the  bill  incorporated  the  Illinois  Central  Bail- 
road  company,  with,  a  perpetual  charter,  gave  it  the  remains 
of  the  old  state  surveys  and  grading^  gave  it  the  federal  lad 
grant  and  right  of  way,  and  exempted  its  property  from  taxa- 
tion. In  return,  the  railroad  was  obliged  to  complete  the  Tnafn 
line  in  four  years,  and  the  branches  in  six,  to  build  the  road 
"'equal  in  all  respects  to  the  Great  Western  of  Massachusetts", 
to  hold  the  state  free  from  any  responsibility  connected  with 
the  grant,  and  to  pay  the  state  seven  per  eent  of  the  gross  earn- 
ings. 

Weekly  Jommal,  February  S  12,  1851. 


CHAPTER  III. 
CONSTRUCTION  OF  THE  CHARTER  LINES. 

Chartering  a  private  corporation  with  liberal  powers  and 
granting  it  nearly  three  million  acres  of  public  land  were  merely 
a  preliminary  step  in  the  building  of  the  Illinois  Central.  In 
1851  railroad  construction  was  in  its  infancy.  The  largest  sys- 
tem at  that  time,  the  New  York  and  Erie,  was  only  three  hun- 
dred miles  long,  and  the  construction  of  a  first  class  trunk  line 
some  seven  hundred  miles  in  length  through  the  thinly  settled 
interior  counties  of  a  western  state  involved  engineering  and 
administrative  difficulties  entirely  new  to  the  promoter  of  the 
early  fifties.  Never  before  in  this  country  had  such  an  enor- 
mous amount  of  capital  been  expended  on  a  single  private  under- 
taking, and  what  the  building  of  the  Canadian  Northern  or 
Panama  Canal  is  to-day,  the  construction  of  the  Illinois  Central 
was  in  the  decade  preceding  the  Civil  War. 

From  the  first  this  final  attempt  to  build  a  railroad  through 
the  center  of  the  state  was  supported  by  some  of  the  ablest  rail- 
road magnates  of  the  time — men  who  had  had  abundant  experi- 
ence in  other  lines  of  business  activity  and  who  also  had  the 
financial  resources  necessary  to  push  the  enterprise  to  a  suc- 
cessful completion.  It  is  doubtful  whether  twelve  men  could 
have  been  selected  who,  at  the  time,  possessed  the  confidence  of 
the  country  to  a  greater  extent  than  did  Robert  Schuyler, 
Gouverneur  Morris,  Robert  Rantoul,  and  the  other  members  of 
the  first  board  of  directors. 

In  general  the  promoters  represented  successful  merchants 
who  constituted  the  moneyed  class  of  the  period;  a  class  whose 
activities  extended  into  politics  and  government,  as  well  as  into 
strictly  commercial  enterprises.  Of  the  entire  board  Robert 
Schuyler  and  Robert  Rantoul  were  probably  the  best  known 
and  most  respected.1 

Robert  Rantoul,  Jr.,  the  man  most  influential  in  securing 

1For  an  interesting  account  of  the  various  persons  connected  with  the 
early  history  of  the  Illinois  Central  the  reader  is  referred  to  Mr.  Acker- 
man's  Historical  Sketch  of  the  Illinois  Central  Railroad. 

40 


325]  CONSTRUCTION   OF   CHARTER   LINES  41 

the  passage  of  the  .charter  by  the  Illinois  Legislature,  was  a 
leading  lawyer  of  Massachusetts.  He  had  held  several  high 
elective  and  appointive  offices  under  both  the  federal  and  state 
governments  and,  in  1852,  on  the  death  of  Daniel  Webster,  he 
represented  his  state  in  the  federal  senate  during  the  remainder 
of  the  term.  During  the  administration  of  President  Fillmore 
he  was  strongly  advocated  as  successor  to  Secretary  of  the  Treas- 
ury Walker,  but  did  not  receive  the  nomination  and  died  shortly 
afterwards.  The  charter  of  1851  is  very  largely  his  work,  and 
during  the  organization  of  the  company  he  was  influential  in 
shaping  its  financial  policy.  The  present  city  of  Rantoul  about 
one  hundred  miles  south  of  Chicago,  is  named  after  him.2 

Second  in  importance  to  Rantoul,  was  the  first  president, 
Robert  Schuyler.  During  the  first  years  of  the  company's  ex- 
istence he  seems  to  have  been  the  leading  director  of  its  work 
and  was  most  active  in  organizing  the  corporation.  One  com- 
pany after  another,  the  New  York  and  New  Haven,  Alton  and 
Sangamon,  Great  Western,  Boston  and  Albany,  and  Illinois 
Central,  all  came  under  his  direction  or  control,  and  in  general 
they  were  well  managed.  Up  to  1853  his  record  was  entirely 
above  suspicion,  but  in  that  year  he  became  involved  in  some 
extremely  questionable  proceedings  in  connection  with  the  New 
York  and  New  Haven  Railroad  by  which  he  fraudulently  issued 
over  a  million  of  stock  to  himself  and  friends.3 

Although  not  one  of  the  original  directors  Mr.  William  H. 
Osborn  soon  became  interested  in  the  Illinois  Central,  and  from 
the  retirement  of  President  Schuyler  in  1853  to  the  acquisition 
of  the  southern  lines  in  1882  he  was  the  dominant  figure  in  the 
history  of  the  company.  A  man  of  great  ability  and  strong 
personality,  with  a  broad  grasp  of  affairs,  he  won  the  absolute 
support  of  stockholders,  employees,  and  shippers,  and  for  over 
twenty  years  English  and  Dutch  shareholders  gave  him  their 
unqualified  proxies,  thus  entrusting  to  him  the  complete  con- 
trol of  the  Illinois  Central.  So  well  did  he  execute  this  trust 
that  even  during  the  periods  of  deepest  depression  they  did  not 
condemn  his  management  of  the  road.  The  company  owes  more 
to  Mr.  Osborn  than  to  any  other  person  connected  with  it.4 

The  remaining  directors  were  prominent  business  men,  but 

2Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  pp. 
27-36;  Chicago  Daily  Democrat,  January  16,  1851. 

3Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  pp. 
57-60;  cf.  Chap.  vi. 

4Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad. 


42  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [326 

they  did  not  exert  such  an  influence  upon  the  management  of  the 
property,  as  did  Eantoul,  Schuyler,  and  Osborn.  With  one  or 
two  exceptions,  they  are  practically  unknown  to-day.5  How- 
ever, as  has  been  the  case  with  most  of  their  successors  in  the 
directorate,  they  took  an  active  interest  in  the  affairs  of  the  cor- 
poration, and  much  of  the  financial  success  of  the  railroad  is 
due  to  their  hard  and  consistent  work  in  directing  the  construc- 
tion of  the  road  and  watching  over  the  financial  operations. 

With  such  a  strong  group  of  promoters,  the  active  work  of 
organization  followed  closely  upon  the  chartering  of  the  com- 
pany. It  is  very  probable  that  a  preliminary  organization  had 
been  created  some  months  before  the  charter  was  actually  se- 
cured. According  to  the  provisions  of  the  charter  the  promoters 
were  allowed  sixty  days  to  accept  it  and  immediately  upon 
receipt  of  the  act  steps  were  taken  to  complete  the  regular 
organization.  However,  Governor  French  was  ex-officio  a 
director,  and  as  there  were  many  matters  of  interest  to  the 
state,  action  was  deferred  until  his  arrival.6  Finally,  on  March 
19,  1851,  the  incorporators  met  in  a  little  dimly  lighted  room  at 
1  Hanover  Street,  New  York  City  and  there  formally  organized 
the  Illinois  Central  Railroad  Company  by  accepting  the  legisla- 
tive act  of  February  10th,  by  making  provision  for  the  various 
requirements  of  the  charter,  and  by  electing  Robert  Schuyler 
president.7 

The  records  of  the  following  meetings  have  never  been 
made  public,  but  from  newspaper  reports,  it  seems  that  active 
work  was  not  long  delayed.  One  million  dollars  of  stock  was 
subscribed,  later  another  million  was  taken,  and  enough  was  paid 
in  to  allow  Mr.  Ketchum,  the  treasurer,  to  deposit  the  guaran- 
tee fund  of  $200,000  required  by  the  charter;  officers  of  the 
company  were  elected;  arrangements  were  made  for  active 
prosecution  of  the  work  in  Illinois;  negotiations  were  opened 

5Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad, 
pp.  21  ff.  Credit  for  the  success  of  the  company  should  also  be 
given  to  the  English  and  Dutch  stockholders.  Up  to  comparatively 
recent  date  the  Illinois  Central  was  owned  largely  by  foreign  stock- 
holders and  these  shareholders  have  always  kept  a  close  watch  on  the 
affairs  of  the  company.  At  times  there  has  been  friction  between  the 
stockholders  and  the  management  in  this  country,  but  on  the  whole, 
much  of  the  success  of  the  railroad  is  due  to  the  active  cooperation  of  the 
English  investors.  This  was  especially  true  in  the  early  history  of  the 
company. 

9 1  bid.,  pp.  21-60. 

''Ibid.;  Chicago  Daily  Democrat,  March  10-30,  1851. 


327]  CONSTRUCTION   OF   CHARTER   LINES  43 

with  the  federal  government  in  regard  to  the  land  grant;  and 
a  definite  financial  program  was  prepared.8 

The  charter  provided  that  work  should  commence  on  the 
main  line  not  later  than  January  1,  1852,  and,  as  the  entire 
route  of  the  road  had  to  be  determined  long  before  that  date, 
there  was  no  time  for  delay.  On  March  22nd,  or  only  three 
days  after  the  organization  of  the  company,  Mr.  Roswell  B. 
Mason,  the  Engineer  and  General  Superintendent  of  the  New 
York  and  New  Haven  Railroad,  better  known  on  account  of  his 
career  as  mayor  of  Chicago,  was  appointed  Engineer-in-Chief 
and  given  entire  charge  of  construction  work  in  Illinois.9  At 
that  time  there  were  few  men  who  had  had  either  a  practical 
or  theoretical  training  in  railway  civil  engineering,  and  the 
selection  of  an  efficient  engineering  staff  was  by  no  means  an 
easy  undertaking.  But  good  pay,  the  importance  of  the  new 
railroad,  and  the  high  reputation  of  Colonel  Mason  overcame 
the  difficulty,  and  by  the  middle  of  May,  a  staff  of  about  seventy 
engineers  had  been  collected  and  were  on  their  way  to  Chi- 
cago.10 

The  party  arrived  in  Illinois  on  the  17th  of  May,  and  the 
work  of  preliminary  survey  was  immediately  started.  Only 
five  specific  points  were  given  in  the  charter,  viz.  Galena,  Chi- 
cago, Cairo,  southern  terminus  in  the  Illinois  and  Michigan 
Canal,  and  Dubuque.  The  only  other  restrictions  upon  the 
route  were  that  the  line  should  pass  within  five  miles  of  the 
northeast  corner  of  Township  21,  range  2,  east  of  the  third 
principal  meridian;  should  not  vary  more  than  seventeen  miles 
either  way  from  a  straight  line  from  Cairo  to  the  southern  ter- 
minus of  the  canal  ;  and  that  the  Chicago  branch  should  not  be 
north  of  the  parallel  of  39  degrees  and  30  minutes.11  Other- 
wise, the  company  had  entire  latitude  in  locating  the  route.12 
As  has  been  the  case  with  practically  every  new  railroad  in  this 
country,  various  towns  entered  upon  a  bitter  contest  for  the 
new  railroad.  In  the  present  instance  sectional  rivalries  had 
been  fanned  into  a  fierce  flame  by  fifteen  years  of  agitation.  So 
intense  was  this  competition  that  the  legislature  could  not  decide 
the  route  and  left  the  controversy  to  the  railroad.18 

For  the  main  line  from  Cairo  to  La  Salle  there  had  been 

8Cf.  Chap.  vi. 

•Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  p.  82. 


"Charter  of  February  10,  1851,  sec.  15,  II  3. 

™Ibid. 

13Cf.  Chap.  n. 


44  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [328 

but  a  single  route  proposed  since  1835,  namely  th »,  present  line, 
passing  through  Du  Quoin,  Vandalia,  Decatur,  and  Blooming- 
ton.  The  "southern  terminus"  of  the  canal  was  in  dispute 
between  La  Salle  and  Peru,  each  claiming  that  it  was  the  legal 
terminus  and  consequently  the  end  of  the  railroad.  From  La 
Salle  to  Galena  there  were  two  possible  routes,  one  passing 
through  Freeport  and  the  other  through  Savannah.  Local  com- 
mittees were  appointed  to  bring  pressure  on  the  officials;  offers 
of  free  right  of  way  and  liberal  city  franchises  were  made,  and 
even  railroad  bridges  and  short  sections  of  track  promised,  if 
only  the  railroad  would  build  through  particular  districts. 
Shelbyville  was  insistent  upon  the  advantages  of  that  place  as 
a  point  on  the  main  line,  as  also  the  junction  of  the  Chicago 
branch,  while  the  controversies  between  Peru  and  La  Salle,  and 
Savannah  and  Freeport  became  extremely  bitter.  Each  of  these 
places  took  active  measures  to  secure  the  railroad  and  even  went 
so  far  as  to  institute  legal  proceedings  to  force  the  company  to 
choose  the  particular  location  desired  by  the  litigant.14.  In  the 
midst  of  this  "down  state"  controversy  the  territory  around 
Chicago  was  aroused  by  a  rumor  that  the  "Central"  was  in- 
tending to  pass  by  that  city  and  run  its  line  from  a  junction 
with  the  Michigan  Central  at  the  state  line  near  what  is  now 
Hammond,  directly  southward  along  the  state  border  to  Jones- 
boro.15  But  threats,  bribes,  and  litigation  alike  had  little  influ- 
ence upon  the  management,  and  it  proceeded  to  lay  out  the 
route  without  heeding  the  demands  or  threats  of  the  various 
rival  towns  along  the  proposed  right  of  way. 

For  the  purpose  of  surveying  the  various  routes  Colonel 
Mason  divided  the  territory  into  seven  general  divisions,  each 
with  the  usual  surveying  party,  and  within  a  few  days  after  the 
engineers  had  reached  Chicago  the  surveys  were  actually  com- 
menced.16 It  was  spring  in  Illinois  and  to  the  usual  disad- 
vantages of  reconnoisance  work  on  the  frontier  were  added  the 
inconvenience  of  Illinois  mud  and  rain.  Mr.  Mason  himself  took 
an  active  part  in  the  work  and  spent  all  the  time  he  could  spare 
from  affairs  at  Chicago  to  obtain  first  hand  information.  Thus, 
by  the  middle  of  summer  he  was  in  a  position  to  make  a  deci- 
sion as  to  the  route.17 

14Chicago  Daily  Democrat,  May  15,  July  23,  1851. 

15Ibid.,  May  15,  1851. 

16Ackerman,  Early  Illinois  Railroads,  p.  82. 

17Ibid.  For  an  interesting  description  of  the  difficulties  connected  with 
the  construction  of  the  road,  the  reader  is  referred  to  Mr.  Ackerman's 
account,  Early  Illinois  Railroads,  p.  82. 


329]  CONSTRUCTION   OF    CHARTER   LINES  45 

In  deciding  the  route  there  were  four  important  considera- 
tions: (1)  As  the  company  could  not  take  land  more  than  fif- 
teen miles  from  the  tracks  it  was  not  desirable  to  run  the  line 
through  thickly  settled  regions  where  much  of  the  land  granted 
the  company  by  the  federal  government  had  already  been  occu- 
pied. (2)  The  road  should  be  so  located  as  to  build  up  the 
largest  and  most  profitable  traffic  possible.  (3)  Wherever 
practicable  there  should  be  a  minimum  cost  of  operation,  and 
all  grades,  curves,  and  sections  involving  heavy  maintenance 
work,  should  be  avoided.  (4)  Finally,  the  cost  of  construction 
should  be  confined  to  the  lowest  amount  consistent  with  safety 
and  good  operating  efficiency;  expensive  rights  of  way,  heavy 
masonry  work,  long  bridges,  expensive  gradings,  and  other 
costly  work  were  decidedly  undesirable. 

Thus,  the  company  selected  the  route  entirely  upon  its 
economic  and  engineering  merits  and,  with  slight  exceptions, 
the  line  chosen  was  the  most  direct  and  shortest  of  the  possible 
routes.  From  Cairo  to  Freeport  the  railroad  was  as.  straight  as 
practicable,  only  slight  variations  being  made  to  include  the 
important  towns  of  Vandalia,  Decatur,  Bloomington,  La  Salle, 
and  Mendota,  and  there  is  one  stretch  of  track  south  of  La  Salle 
which  extends  sixty  miles  without  a  curve.  The  Chicago  branch 
from  the  junction  with  the  main  line  at  Centralia,  was  also 
almost  straight,  and  for  the  entire  distance  of  two  hundred  and 
fifty  miles  only  three  curves,  and  those  of  large  radius,  were 
necessary.  In  selecting  the  route  from  Dixon  to  Galena,  the 
preference  was  given  to  Freeport  instead  of  Savannah ;  and  the 
present  line  of  the  Chicago  branch  was  decided  upon  in  prefer- 
ence to  the  line  farther  east.  With  the  various  disputed  points 
decided,  the  total  length,  according  to  Colonel  Mason's  first 
report,  was  699  miles.18 

The  questions  connected  with  the  route  having  been  settled, 
the  engineers  were  free  to  spend  their  entire  time  in  completing 
the  surveys  and  preparing  the  preliminary  estimates  of  cost  of 
construction.  Work  progressed  rapidly,  and  by » September  1, 
1851,  a  preliminary  report  covering  both  amount  and  cost  of 
construction  work  was  submitted  to  the  president.19  Heavy  T 
rails,  light  grades,  easy  curves,  well  built  embankments  and  fills, 
ample  cuts,  and  brick  or  stone  buildings  were  to  be  provided, 

"Report  of  President  Schuyler  to  Directors,  September  12,  1851,  in 
Documents  Relating  to  the  Organization  of  the  Illinois  Central  Railroad. 


46  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [330 

and  everything  was  to  be  of  the  highest  standard  consistent  with 
the  light  traffic  conditions  which  would  prevail  on  a  western  rail- 
road.20 Although  built  over  the  level  prairies  of  Illinois,  an 
average  of  thirty  thousand  cubic  yards  of  earth  was  to  be  used 
per  mile  on  embankments  and  fills.21  Including  equipment  and 
all  construction  expenditures,  the  total  cost  was  estimated  at 
$16,537,212,  or  $23,700  per  mile.22  Even  this  liberal  amount 
proved  to  be  insufficient  and  the  final  cost  exceeded  the  prelimi- 
nary figures  by  some  ten  millions  of  dollars.23 

The  surveys  were  hastened  as  much  as  possible,  but  the  final 
results  were  submitted  none  too  soon.  According  to  the  char- 
ter, the  main  line  was  to  be  completed  within  four  years  from 
February  10th,  1851,  and  the  branches  within  six  years,  while 
work  on  the  main  line  was  to  be  commenced  by  January  1st, 
1852;  therefore,  it  was  imperative  that  the  construction  should 
not  be  delayed.2*  Nor  was  the  undertaking  an  easy  one  to  com- 
plete within  this  short  period.  Large  construction  companies 
did  not  then  exist  ;  rails,  chairs,  fastenings,  and  bridge  iron  had 
to  be  imported  from  England,  and  other  supplies  carried  west 
from  New  England,  New  York,  and  Pennsylvania;  the  amount 
of  grading  was  very  great;  and  labor  was  far  from  abundant.25 
Thus,  even  aside  from  any  financial  difficulties,  the  question  of 
building  the  road  within  the  time  limit  was  very  perplexing,  and 
the  directors,  as  well  as  Colonel  Mason,  were  forced  to  pay  close 
attention  to  construction  work  in  Illinois. 

Among  the  various  questions  which  occupied  the  attention 
of  the  directors  was  the  one  "by  whom  and  in  what  way  should 
the  road  be  built".  As  early  as  April  23rd,  1851,  a  Mr.  Frank- 
lin, for  several  years  railroad  engineer  for  the  Russian  Govern- 
ment, offered  to  build  the  Illinois  Central  Railroad  and  take 
bonds  in  payment  on  very  liberal  terms.2*  Even  before  that 
date  it  was  rumored  that  private  corporations  were  willing  to 

20Report  of  President  Schuyler  to  Directors,  September  12,  1851,  in 
Documents  Relating  to  the  Organization  of  the  Illinois  Central  Railroad; 
also  charter,  Illinois  Central  Railroad,  sec.  15,  1  3. 


"Ibid. 

23Ibid.;  cf.  Chap.  vi. 

"Charter,  Illinois  Central  Railroad,  sec.  15,  fl  3  ;  ibid.,  sec.  23. 
25Cf.  Chap.  n.     Practically  no  railroad  material  was  made  in  this 
country,  and  it  had  to  be  imported  from  Europe. 
^Chicago  Daily  Democrat,  April  23,  1851. 


331]  CONSTRUCTION   OF    CHARTER   LINES  47 

undertake  the  construction  of  large  portions  of  the  road.27  But 
the  work  was  entirely  beyond  the  capacity  of  any  private  con- 
struction company  and  the  officials  of  the  Illinois  Central  wisely 
determined  either  to  build  the  road  themselves  or  else  to  let 
the  work  out  in  small  sections.  This  conclusion  was  reached 
early  in  1851,  and  Colonel  Mason's  estimates,  therefore,  were 
made  with  that  end  in  view. 

Although  the  preliminary  engineering  estimates  were  sub- 
mitted by  the  first  of  September,  the  final  estimates  were  not 
submitted  until  much  later,  and  it  was  impossible  to  start  active 
construction  work  on  the  main  line  that  fall.  However,  in 
accordance  with  the  letter  of  the  charter,  the  Illinois  Central, 
on  December  23rd,  1851,  broke  ground  at  both  Cairo  and  Chi- 
cago, and  amidst  elaborate  ceremonies,  the  salutes  of  cannon, 
and  the  ringing  of  bells,  formally  commenced  the  construction 
of  this  great  enterprise.28  During  the  winter  contracts  were 
made  for  supplies,  the  federal  land  survey  was  completed,  ar- 
rangements were  made  for  transfer  of  the  land  to  the  company, 
and  other  preliminary  work  was  completed. 

Specifications  had  been  prepared  during  the  winter,  and  on 
the  15th  of  March,  1852,  the  company  invited  bids  for  the  con- 
struction of  divisions  1,  2,  6,  8,  9,  and  10.  The  proposals  were 
to  include  grading,  masonry,  bridging,  superstructure  for  the 
entire  division  or  a  part  of  the  same,  or  merely  for  a  single  item, 
such  as  grading,  if  desired.29  Bids  could  be  entered  with  or 
without  material.  The  terms  were  one-half  cash  and  one-half 
seven  per  cent  bonds  at  par,  with  the  usual  arrangement  in 
regard  to  inspection,  completion  within  a  specified  period,  and 
other  matters.  At  the  time  the  contracts  were  placed  the  credit 
of  the  road  was  exceptionally  strong,  and  there  was  a  ready 
response  on  the  part  of  contractors,  both  in  Illinois  and  the  east- 
ern states.  Men  even  came  on  from  Europe  and  there  was  not 
a  section  of  the  line  that  was  not  bid  for  several  times.  As  a 

"Chicago  Daily  Democrat,  April  22,  1851.  Cf.  this  method  with  the 
Credit  Mobilier  in  the  Union  Pacific  and  the  Construction  company  in  the 
Iowa  Falls  and  Sioux  City,  infra  Chap.  rv. 

2*Cairo  Sun,  December  25,  1851. 

29Chicago  Daily  Democrat,  April  23,  1851 ;  ibid.,  March  25,  1852.  To 
facilitate  the  work  of  construction,  the  road  was  divided  into  twelve  divi- 
sions, varying  in  length  from  fifty  to  seventy-five  miles,  according  to  the 
character  and  extent  of  the  grading  and  bridging.  Over  each  division 
was  placed  a  division  engineer,  whose  duty  it  was  to  supervise  the  indi- 
vidual contracts  and  direct  the  construction  done  directly  by  the  com- 
pany. 


48  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [332 

result  the  bids  were  low  and  the  terms  favorable  to  the  company. 
This  permitted  the  railroad  to  let  the  -work  out  at  reasonable 
figures.  In  many  cases  the  division  contractors  sub-let  part  of 
the  work.  The  strong  competition  between  bidders,  and  the 
financial  standing  of  the  company,  prevented  letting  the  work 
at  excessively  high  prices  and  the  Illinois  Central  was  built  as 
cheaply  as  could  have  been  expected  under  semi-frontier 
conditions.30 

Contracts  for  the  first  six  divisions  were  let  early  in  June, 
1852,  and  bids  for  the  3rd,  4th,  5th,  7th,  llth,  and  12th  divisions 
were  accepted  later  in  the  summer.  Work  was  commenced  im- 
mediately on  the  3rd,  4th,  5th,  and  7th  divisions,  but  the  llth 
and  12th  were  not  pushed  until  two  years  later.31  The  bids 
included  only  the  grading  and  part  of  the  bridge  construction; 
the  company  itself  laid  the  rails  and  erected  most  of  the  build- 
ings.32 Thus,  by  the  end  of  October,  1852,  the  entire  road,  with 
the  exception  of  52  miles  north  of  the  Big  Muddy  River,  where 
the  contractors  had  given  up  their  work,  was  under  contract 
and  active  construction  had  been  started.33 

The  affairs  of  the  Illinois  Central  at  Chicago  did  not  pro- 
ceed as  smoothly  as  in  the  southern  and  central  parts  of  the 
state.  Railroad  matters  in  that  city  had  been  in  a  thoroughly 
demoralized  condition  for  many  months  prior  to  the  passage  of 
the  charter,  and  the  company  was  forced  to  take  a  hand  in  local 
railroad  controversies  and  also  in  municipal  politics  in  order  to 
secure  adequate  terminal  facilities  and  a  city  franchise.  The 
conflict  between  the  Lake  Shore  and  Michigan  Southern  (then 
the  Southern  Michigan)  and  the  Michigan  Central  involved  the 
Illinois  Central  in  the  greatest  difficulties. 

For  several  years  these  two  railroads  had  been  keen  rivals 
in  Michigan  and  northern  Indiana,  and  during  the  year  1850 
they  had  extended  their  tracks  to  within  a  few  miles  of  Chicago. 
Each  endeavored  to  secure  an  independent  entrance  to  the  city 

30  Advertisement  in  railroad  journals,  March,  1852;  also  Chicago  Daily 
Democrat,  March  25,  1852.  There  was  undoubtedly  a  small  amount  of 
mismanagement  in  the  construction  of  the  road,  but  the  amount  was 
small.  Some  of  the  directors  were  interested  in  contracts  with  the  com- 
pany, but  there  is  no  evidence  to  show  that  they  used  their  official  posi- 
tions to  defraud  the  company.  For  a  full  discussion  of  these  points, 
cf.  Chap.  vi. 

^American  Railroad  Journal,  October  25,  1856. 


**Ibid. 


333]  CONSTRUCTION   OF   CHARTER  LINES  49 

and  to  prevent  its  competitor  from  obtaining  a  similar  right. 
The  result  was  a  bitter  fight  in  the  legislatures  of  Illinois,  Michi- 
gan, and  Indiana,  in  the  common  council  of  Chicago,  in  munici- 
pal politics  of  that  city,  and  even  between  groups  of  workmen 
along  the  tracks.34  The  companies  were  of  equal  strength,  and 
neither  could  secure  a  charter  from  the  state  of  Illinois  or  a  fran- 
chise from  the  city.  Despite  all  their  efforts  the  two  railroads,  in 
1851,  were  halted  at  the  Illinois  state  line. 

The  charter  for  the  Illinois  Central  was  before  the  legisla- 
ture at  this  time,  and  the  Michigan  Central  allied  itself  with  the 
promoters  of  this  road,  hoping,  thereby,  to  secure  the  coveted 
entrance  to  Chicago.  The  influence  of  the  Michigan  company 
was  brought  to  bear  on  the  legislature,  and  it  is  very  probable 
that  financial  assistance  was  extended  to  the  promoters  of  the 
new  company.  The  charter  was  eventually  passed,  and  the  Illi- 
nois Central  was  allowed  to  make  connections  with  other  rail- 
roads.35 At  the  time,  it  was  commonly  understood  this  provision 
applied  to  the  Michigan  Central. 

Very  soon  after  the  ''Central"  was  organized  rumors  began 
to  arise  that  the  two  companies  were  to  form  some  kind  of  a 
connection  by  which  the  Michigan  corporation  would  enter  Chi- 
cago over  the  tracks  of  the  Illinois  Central.  However,  these  ru- 
mors were  groundless  and  nothing  more  was  heard  until  the 
Illinois  Central  itself  commenced  surveys  southwest  of  the  city 
towards  the  Indiana  state  line  and  the  Kankakee  Kiver.38 

While  these  preliminary  surveys  were  being  completed,  the 
company  was  making  special  efforts  to  secure  an  ordinance  ad- 
mitting it  to  the  city  of  Chicago.  Mr.  Brayman,  of  Springfield, 
and  Eepresentative  Bissell,  of  Belleville,  had  been  appointed 
solicitors  of  the  company  in  Illinois  and  on  July  12,  1851,  the 
latter,  in  connection  with  representatives  of  the  Michigan  Cen- 
tral Railroad,  presented  a  petition  to  the  city  council  of  Chicago 
asking  permission  to  lay  down  tracks  within  the  city  limits.37 
A  few  days  later,  this  memorial  was  withdrawn  for  revision  on 
account  of  opposition  in  the  council.38 

Three  months  later  Colonel  Bissell  submitted  a  second  me- 

S4Cf.  Chicago  Daily  Democrat  during  the  latter  half  of  the  year  1850. 
Mr.  Wentworth,  editor  of  the  Democrat,  took  an  active  part  in  the  con- 
troversy. 

"Charter,  Illinois  Central  Railroad,  sec.  II. 

^Chicago  Daily  Democrat,  May  21,  1851. 

37Ibid.,  July  13,  1851. 

"Ibid.,  October  17,  1851. 


50  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [334 

morial.39  Although  the  construction  of  the  Illinois  Central  was 
regarded  as  one  of  the  most  important  events  in  recent  state 
history  the  city  council,  and  to  a  less  extent,  the  daily  newspa- 
pers, were  hostile  to  the  company.  The  strife  over  the  Southern 
Michigan-Michigan  Central  entrance  had  been  so  'bitter  that  the 
supposed  alliance  between  the  Illinois  Central  and  the  Michigan 
Central  brought  upon  the  former  suspicion  and  even  opposition. 
So  strong  was  the  feeling  that,  upon  a  mere  rumor  that  the 
"Central"  was  planning  to  build  a  cut-off  to  Joliet,  thus  estab- 
lishing a  rival  railroad  center  near  the  Indiana  line,  a  resolution 
was  introduced  into  the  city  council  of  Chicago,  disapproving 
such  a  policy  and  bitterly  attacking  the  Illinois  company.40  The 
element  opposed  to  the  Michigan  Central  was  strong  enough  to 
pass  the  resolution  and,  in  addition,  appropriate  ten  thousand 
dollars  to  be  used  in  preventing  the  establishment  of  the  Joliet 
cut-off.41  This  action  was  commonly  attributed  to  representa- 
tives of  the  Southern  Michigan  Railroad,  and  immediately  after 
the  passage  of  the  resolution  copies  were  printed  and  scattered 
broadcast  throughout  the  eastern  states,  England,  and  Holland 
to  hinder  the  floating  of  the  Illinois  Central  loan.42  The  city 
council  soon  found  that  their  action  was  uncalled  for,  and  a  few 
days  after  the  passage  of  the  original  measure  it  reconsidered 
the  matter,  modified  the  extreme  statements  of  the  first  resolu- 
tion,43 and  adopted  a  more  conciliatory  policy  toward  the  three 
railroad  companies.44 

Despite  the  distrust  and  hostility  shown  in  the  action  of 
the  council,  Colonel  Mason  and  Solicitor  Bissell  again  presented 
their  petition  for  an  entrance  to  the  city.  After  a  careful  con- 
sideration of  the  various  routes  the  company  asked  for  an  en- 
trance along  the  lake  front.  The  railroad  was  to  be  built  north- 
east from  Lake  Calumet,  now  Kensington,  to  the  southern  limits 
of  the  city  at  what  is  now  53rd  Street.  This,  of  course,  was 
outside  the  old  city  boundaries.  From  Hyde  Park  to  Park  Bow, 
12th  Street,  the  company  was  to  have  permission  to  place  its 
tracks  along  the  lake  shore  and  could  purchase  what  land  it 

zgChicago  Daily  Democrat,  October  17,  1851. 

40Ibid.,  October  13,  17,  1851. 

*llbid.  The  files  of  newspapers  for  the  days  in  which  this  resolution 
was  printed  are  unobtainable  and  the  only  information  to  be  found  in 
regard  to  the  same  comes  from  editorials  of  a  later  date. 

*2Ibid. 


"Ibid. 


335]  CONSTRUCTION   OF   CHARTER   LINES  51 

needed  from  private  owners  of  real  estate.  From  Park  Row  to 
the  Chicago  River  the  railroad  was  to  receive  from  the  city  a 
five  or  six  hundred  foot  right  of  way  just  east  of  Michigan 
Avenue.  In  return  for  this  grant,  the  company  agreed  to  pro- 
vide permanent  protection,  in  the  form  of  levees  and  piling, 
against  the  encroachments  of  Lake  Michigan.  This  protection 
was  to  extend  from  Hyde  Park  to  the  Chicago  River.45  When 
the  petition  of  the  company  was  presented,  the  city  had  provided 
practically  no  protection  against  the  lake,  and  most  of  the  terri- 
tory north  of  the  city  limits  and  east  of  the  present  Illinois 
Central  tracks  was  submerged  land. 

Sixty  years  ago  Michigan  Avenue  was  the  aristocratic  resi- 
dence street  of  Chicago  and  the  proposition  to  run  a  steam 
railroad  along  the  avenue  provoked  strenuous  opposition  from  the 
property  owners,  who  believed  it  would  destroy  the  value  of 
their  investments.  On  the  other  hand,  the  north  and  west  wards 
had,  for  years,  paid  heavy  taxes  to  protect  the  lake  shore  from 
encroachments  of  Lake  Michigan,  and  that  portion  of  Chicago 
gladly  supported  the  Illinois  Central  plan.  They  argued  that 
the  city  was  poor  and  the  assumption  by  the  railroads  of  the 
expense  of  maintaining  the  south  side  levees  would  more  than 
compensate  for  any  depreciation  in  the  value  of  residence  prop- 
erty in  the  neighborhood.46  Mass  meetings  and  parades  were 
held  by  each  side;  circulars  and  petitions  were  widely  circu- 
lated ;  the  newspapers  took  an  active  interest  in  the  matter ;  and 
both  sides  threatened  to  resort  to  legal  proceedings  to  gain  their 
point.  The  fight  was  carried  to  the  city  council  and  this  subject 
occupied  the  attention  of  the  members  during  the  entire  month 
of  December.  The  Illinois  Central  finally  gained  the  upper  hand 
and  on  December  29,  they  secured  the  passage  of  the  ordinance 
by  a  close  vote  of  ten  to  six.47  The  main  features  of  the  franchise 
were  those  embodied  in  the  petition  of  the  company  with  some 
minor  exceptions.  Among  these  was  a  reduction  of  the  right  of 
way  from  12th  Street  to  the  river  to  three  hundred  feet.  The 
restrictions  upon  the  company  were  also  made  more  severe. 

The  decision  of  the  city  council  did  not  settle  the  fight.  Wal- 
ter Gurnee  was  Mayor  at  the  time,  and  on  account  of  a  number 
of  minor  objections  to  the  ordinance  as  passed,  and  also  on 
account  of  his  general  opposition  to  the  policy  of  the  measure, 

4SChicago  Daily  Democrat,  December  3,  1851. 
**Ibid.,  daily  notices  during  December,  1851. 
"Ibid.,  December  30,  1851. 


52  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [336 

he  vetoed  the  franchise.48  The  matter  was  again  taken  up  in 
the  council  and  that  body  passed  the  ordinance  over  his  veto.49 
The  document  was  immediately  forwarded  to  the  directors  of 
the  company  in  New  York  for  their  approval,  but  on  the  very 
day  on  which  the  papers  left  the  city,  the  «whole  matter  was 
reconsidered  by  the  council.  The  two  opposing  parties  compro- 
mised their  differences  and  a  new  franchise,  agreeable  to  the 
south  side  wards,  was  passed.  It  was  signed  by  Mayor  Gurnee 
and  forwarded  to  New  York  three  days  after  the  first  ordi- 


50 


nance. 

The  original  franchise  had  been  duly  received  in  New  York 
and  the  directors  of  the  company,  unaware  of  the  amending 
measure  and  well  satisfied  with  the  provisions,  accepted  the  old 
franchise.51  Three  days  later,  much  to  their  astonishment,  there 
appeared  the  second  ordinance.  Although  similar  in  most  ways 
to  the  petition  of  the  company  there  were  some  new  restrictions 
upon  the  company  which  the  directors  did  not  desire  to  accept, 
and  consequently  the  board  declined  to  accept  it  and  preferred 
to  wait  for  more  favorable  legislation.52 

Supposing  the  first  measure  had  definitely  settled  the  ques- 
tions under  dispute  in  regard  to  an  entrance  into  Chicago  the 
President  immediately  directed  the  engineers  to  commence  active 
construction  work  from  Chicago  to  the  state  line.  When  the 
second  ordinance  was  not  accepted,  the  company,  of  course,  had 
no  legal  right  to  enter  the  city,  but  rather  than  delay  matters 
it  was  determined  to  complete  the  railroad  from  Lake  Calumet  to 
the  city  limits  at  -once.  There  was  practically  no  danger  of  not 
obtaining  a  proper  entrance  to  the  city,  and  the  construction  of 
this  section  would  provide  the  Michigan  Central  with  its  much 
desired  entrance  into  Chicago  without  a  protracted  delay.58 
Much  of  the  ground  south  of  the  city  limits,  especially  near  Lake 
Calumet  and  Woodlawn,  was  low  and  marshy,  and  this  made  it 
necessary  to  place  the  tracks  on  trestle  work  at  considerable 
additional  expense.  Rails  and  ties  had  been  ordered  in  the  fall 
of  1851  and  by  January,  1852,  the  first  shipments  had  arrived. 
Grading  and  other  preliminary  work  was  commenced  in  Decem- 
ber, and  the  combined  energies  of  the  Michigan  Central  and 

**Chicago  Daily  Democrat,  January  i,  1852. 

49Ibid.,  January  3,  1852. 

60Ibid.,  January  6,  1852. 

"/&«/.,  January  10,  1852. 

"Ibid.,  March  12,  1852. 

6*Ibid.,  January  10,  1852. 


337]  CONSTRUCTION   OF   CHARTER  LINES  53 

Illinois  Central  were  exerted  to  finish  the  line  from  the  Indiana 
border  to  Lake  Calumet  and  from  there  to  Hyde  Park.54  Conr 
struction  was  continued  when  possible  during  the  winter,  and 
as  soon  as  the  weather  permitted  both  companies  placed"  large 
gangs  of  men  at  work.  By  May  1  the  railroad  was  within  eight 
miles  of  the  city  limits,55  and  three  weeks  later  that  short  stretch 
was  completed.  On  the  twenty-first  of  the  month,  the  first  train, 
hauling  gravel  and  construction  materials,  left  Calumet  and  ran 
to  the  city  limits.56  Temporary  freight  and  passenger  stations 
had  been  established  just  outside  the  limits  and  on  the  morning 
of  May  22  this  first  completed  section  of  the  Illinois  Central 
was  formally  opened,  and  a  passenger  train  was  run  from  Chi- 
cago to  the  state  line.57  Regular  freight  and  passenger  trains 
were  placed  in  service  a  few  days  later.  The  Michigan  Central 
made  use  of  the  tracks  of  the  Illinois  Central  from  Calumet  to 
Chicago,  and  this  piece  of  roadbed  became  the  final  link  by  which 
the  former  company  established  a  through  line  from  Chicago  to 
the  East.58 

The  tracks  from  the  city  limits  south  were  not  completed 
without  several  sharp  fights  with  the  Southern  Michigan.  That 
company  opposed  the  construction  of  the  road  and  endeavored 
to  prevent  the  Illinois  Central  from  crossing  its  tracks.  It  de- 
manded that  the  latter  company  put  in  an  overhead  crossing  at 
what  is  now  Grand  Crossing,  which  was  refused.  The  difficulty 
could  not  be  settled  and  each  company  refused  to  allow  the  other 
to  put  in  any  crossing  at  all.  Finally  the  Illinois  Central  impa- 
tient of  this  delay  sent  laborers  to  build  the  crossing  under  cover 
of  night.  The  Southern  Michigan  was  taken  by  surprise,  its 
watchmen  were  overpowered,  and  the  grade  crossing  was  finished 
before  morning.  The  Michigan  company  was  forced  to  accept 
the  situation  and  the  last  obstacle  to  the  completion  of  this  sec- 
tion was  removed.59 

This  steady  construction  work,  carried  on  regardless  of  the 
warring  factions  in  the  Chicago  city  council,  exerted  a  strong 

B4Ackerman,  Early  Illinois  Railroads,  p.  82. 

^Chicago  Daily  Democrat,  May  3,  1852;  cf.  March  25,  1852. 

s*Ibid.,  May  22,  1852. 

S7Ibid.,  May  23,  1852;  Ackerman,  Early  Illinois  Railroads,  p.  85. 

68Ibid.;  also  advertisements  of  train  service  in  Chicago  newspapers 
after  June,  1852. 

^Chicago  Daily  Democratic  Press,  April  30,  1853.  The  matter  of 
Grand  Crossing  was  a  sore  point  between  the  two  roads  for  several  years. 
Within  a  few  weeks  after  the  crossing  was  put  in,  a  bad  accident  occurred 


54  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [338 

pressure  upon  that  body.  This  influence  was  further  strength- 
ened by  vague  rumors  of  a  cut-off  from  Joliet  to  Calumet  which 
would  divert  a  considerable  traffic  from  Chicago  proper.80  No 
attempt  was  made  to  press  the  franchise  question  until  the 
twentieth  of  April,  only  a  month  before  the  railroad  reached  the 
city  limits.  Local  objections  still  continued,  but  the  pressure  of 
the  Illinois  Central  and  Michigan  Central  overcame  this  oppo- 
sition, and,  finally,  on  June  14th,  1852,  the  common  council  re- 
enacted  the  first  ordinance  originally  passed  on  December  29. 
The  railroad  was  admitted  to  the  city  via  the  lake  front  route 
and  was  granted  a  three  hundred  foot  right  of  way  from  Hyde 
Park  to  the  Chicago  River.  In  return  for  this  grant,  the  rail- 
road assumed  the  responsibility  of  protecting  the  lake  shore 
along  its  right  of  way,  and  agreed  not  to  put  up  any  permanent 
buildings  from  Park  Row  to  Randolph  Street.  Certain  other 
obligations  and  restrictions  were  imposed  upon  the  company, 
but,  in  the  main,  the  franchise  greatly  favored  the  railroad.81 

With  subsequent  purchases  of  land  between  Park  Row  and 
the  river,  partly  from  private  owners  and  partly  from  the  federal 
government,  the  Illinois  Central  secured  probably  the  finest  ter- 
minal property  possessed  by  any  single  railroad  in  the  world. 
Its  stations  and  shops  were  situated  in  the  heart  of  the  city  and 
its  right  of  way  between  Grand  Crossing  and  the  river  was  not 
crossed  by  a  railroad  and  for  most  of  the  distance  not  even  by 
a  highway.  From  the  standpoint  of  the  railroad,  the  right  of 
way  along  the  lake  front  was  of  almost  inestimable  value ;  from 
the  standpoint  of  the  public,  there  is  much  to  criticise  in  having 
the  otherwise  splendid  lake  front  marred  by  smoky  trains  and 
unsightly  railroad  tracks,  but  it  must  not  be  forgotten  that  in 
the  early  fifties  the  bargain  was  in  favor  of  the  city.  In  pro- 
tecting the  many  miles  of  shore  line  from  the  river  to  Hyde 
Park  the  railroad  assumed  a  responsibility  that  was  both  trou- 
blesome and  expensive,  while  the  city  was  relieved  of  expendi- 
tures amounting  to  tens  of  thousands  of  dollars  a  year,  not  an 
inconsiderable  item  for  the  Chicago  of  1850.  Nor  must  it  be 
forgotten  that  this  easy  and  uninterrupted  entrance  to  the  very 

in  which  several  lives  were  lost,  and  the  two  companies  accused  each 
other  of  having  been  to  blame  for  not  putting  in  an  overhead  crossing. 
However,  evidence  seems  to  show  that  both  companies  were  equally  to 
blame.  Cf.  articles  in  Chicago  Daily  Democratic  Press,  April  30,  1853. 

^Chicago  Daily  Democrat,  May  3,  15,  1852;  Ackerman,  Historical 
Sketch  of  the  Illinois  Central  Railroad,  p.  81. 

^Chicago  Daily  Democrat,  May  3,  15,  1852;  Ackerman,  Early  Illinois 
Railroads,  p.  85. 


339]  CONSTRUCTION   OF   CHARTER   LINES  55 

heart  of  the  business  district  has  been  an  important  factor  in 
the  industrial  development  of  the  city. 

Once  the  legal  difficulties  were  removed,  the  work  of  con- 
struction proceeded  rapidly.  Rails,  ties,  and  piles  were  already 
on  hand  and  within  a  few  weeks  after  the  passage  of  the  fran- 
chise admitting  the  railroad  to  the  city,  the  track  was  extended 
to  Twelfth  Street.  Temporary  freight  and  passenger  stations 
were  built  there  and  used  until  the  permanent  structures  were 
finished.  Much  of  the  right  of  way  was  under  water  and  heavy 
expenditures  were  necessary  to  put  the  tracks  in  a  safe  condition. 
The  rails  were  laid  on  trestle  work  for  nearly  the  entire  distance 
from  Hyde  Park  to  Randolph  Street  and  beyond  the  right  of 
way  a  temporary  breakwater  of  piling  was  erected.  The  pile 
and  trestle  work  was  to  be  filled  in  at  a  later  time  when  the 
company's  finances  would  justify  the  outlay.82 

The  company  also  purchased  large  quantities  of  land  in  the 
heart  of  the  city  near  Randolph  Street  and  expended  something 
like  $250,000  in  purchasing  urban  property,  in  addition  to  half 
a  million  more  expended  on  the  lake  shore  protection,  virtually 
purchase  money  for  the  generous  right  of  way  granted  by  the 
city.63  At  the  foot  of  Randolph  Street  on  land  purchased  from 
the  federal  government,  the  company,  in  1853,  commenced  the 
erection  of  its  famous  Chicago  passenger  station,  the  total  cost 
of  which  was  over  a  quarter  of  a  million  of  dollars.  At  the  time 
it  was  the  most  expensive  railroad  station  in  the  country.  The 
facilities  for  handling  passengers  were  excellent,  and  there  was 
an  abundance  of  room.  The  building  was  used  jointly  by  the 
Illinois  Central,  Michigan  Central,  and  Chicago,  Burlington  and 
Quincy  railroads,  and  the  top  floor  of  the  station  was  used  as  a 
general  office.  North  of  the  passenger  station,  the  company 
erected  a  large  in-and-out  freight  house,  which  was  also  the 
largest  depot  of  its  kind  in  the  country,  and  the  largest  brick  or 
stone  building  in  the  city.  At  Fourteenth  Street,  near  the  pres- 
ent Park  Row  passenger  station,  were  placed  the  terminal  shops, 
roundhouses,  and  cleaning  yards.  Then,  in  1856,  the  Fourteenth 
Street  works  of  the  American  Car  Company  of  Chicago  were 
purchased  and  after  that  date  most  of  the  heavy  engine  and  car 

62Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad,  pp. 
80-85 ;  Annual  Report,  Illinois  Central  Railroad,  1855 ;  Chicago  newspapers, 
1852.  The  breakwater  and  trestlework  were  not  filled  in  until  after  the 
Chicago  fire  of  1871. 

^Annual  Report,  Illinois  Central  Railroad,  1855-1860.  Chicago  Daily 
Democrat,  January  i,  1852-1860.  Cf.  Chap.  vi. 


56  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [340 

repairs  on  the  system  were  handled  at  these  shops.  A  number 
of  locomotives  and  cars  were  also  built  by  the  company  at  the 
new  works.  By  1855,  nearly  a  million  dollars  had  been  expended 
by  the  company  for  construction,  right  of  way,  lake  shore  pro- 
tection, buildings,  and  other  terminal  improvements  in  the  city 
limits.  The  work  was  continued  during  the  following  five  years, 
in  which  time  an  additional  million  was  spent  on  the  Chicago 
terminals. 

Moreover,  on  June  23rd,  1852,  the  company  had  secured  an 
amendment  to  its  charter  permitting  it  to  build  a  railroad  from 
Twelfth  Street  to  the  south  branch  of  the  Chicago  River.64  This 
road,  known  as  the  St.  Charles  Air  Line,  served  as  an  inner  belt 
railroad  for  the  Illinois  Central,  Michigan  Central,  Lake  Shore, 
Chicago,  Burlington  and  Quincy,  Galena  and  Chicago  Union,  Chi- 
cago and  Eock  Island,  and  Chicago  and  Northwestern  railroads. 
It  was  built  by  the  Illinois  Central  and  was  completed  in  1856 
at  a  total  cost  of  $50,000.65 

%  While  these  large  expenditures  were  being  made  at  Chicago, 
work  on  other  portions  of  the  system  was  not  neglected.  The 
company  had  little  difficulty  in  securing  the  right  of  way  and 
station  ground  needed.  Nor  was  there  much  trouble  in  obtain- 
ing village  and  town  franchises.  The  Illinois  Central  created  a 
majority  of  the  villages  and  towns  along  its  tracks,  and  it  held 
the  grounds  before  there  was  any  municipal  organization.  The 
only  opposition  to  granting  a  franchise  was  at  Galena.  The 
railroad,  under  both  the  state  and  Holbrook  projects,  terminated 
at  that  city,  and  the  citizens  were  bitterly  opposed  to  the  exten- 
sion of  the  line  to  Dunleith.  They  realized  that  the  construction 
of  the  "Central"  to  that  point  meant  disaster  to  their  business 
interests.  Since  the  extension  of  the  road  was  an  essential  part 
of  the  state  charter  and  of  the  act  of  Congress  conferring  the 
land  grant,  there  was  no  possibility  of  changing  the  provision. 
The  city,  however,  placed  numerous  obstacles  in  the  way  of  the 
railroad,  and  for  several  months  refused  to  give  the  company  a 
franchise.  These  tactics,  of  course,  were  childish,  and  the  city 
council  finally  yielded.  The  railroad  received  the  right  to  enter 
Galena,  but  only  with  many  conditions  and  restrictions.68 

"Session  Laws  of  Illinois,  1852-1853,  June  23,  1852. 

^Annual  Report,  Illinois  Central  Railroad,  1855-1857.  The  Illinois 
Central  subsequently  sold  three-fourths  of  its  interest  in  the  St.  Charles 
Air  Line  to  the  Michigan  Central,  Chicago,  Burlington  &  Quincy,  and 
Chicago  &  Northwestern. 

"The  following  is  taken  from  the  Chicago  Daily  Democratic  Press 


341]  CONSTRUCTION   OF   CHARTER  LINES  57 

The  matter  of  local  franchises  did  not  interfere  with  the 
commencement  of  construction  work,  and,  as  noted  above,  con- 
tracts for  the  entire  road  were  let  in  the  spring  and  early  sum- 
mer of  1852.  The  Illinois  Central  was  more  fortunate  than  most 
of  the  roads  of  the  time  in  that  it  had  considerable  resources 
upon  which  it  could  draw  at  a  moment's  notice.  The  sale  of  the 
four  million  loan  of  February,  1852,  and  the  five  million  sterling 
loan  of  June,  the  same  year,  together  with  subscriptions  by  the 
stockholders,  provided  ample  funds  for  starting  the  work.  Part 
of  the  later  loans,  especially  the  Free  Land  issue  of  1855-56, 
were  placed  at' a  considerable  discount,  but  the  money  market 
fluctuations  which  brought  this  condition  to  pass,  did  not  se- 
riously interfere  with  the  loans.  Moreover,  the  capital  stock  of 
over  fourteen  million  dollars  was  issued  subject  to  assessment, 
and  the  directors  always  had  this  to  fall  back  upon  in  emer- 
gency. Thus,  at  all  times,  the  company  had  either  in  hand  or 
in  sight,  whatever  funds  were  necessary  to  carry  on  the  enter- 
prise in  the  most  economical  and  expeditious  manner.  Economy 
and  good  management  were  always  observed,  but  the  directorate 
was  also  in  a  position  to  push  the  work  as  much  as  possible. 
Materials  and  labor  were  paid  for  in  cash  or  bonds  equivalent 
to  cash  and  payments  were  met  promptly.  With  the  exception 
of  a  few  weeks  after  the  assignment  of  1857,  all  bills,  contracts, 
notes  or  other  obligations  were  liquidated  when  due,  and  the 
credit  of  the  company  was  always  high.67  This  condition  was  a 
decided  contrast  to  the  "hand-to-mouth"  policy  pursued  by  such 
southern  roads  as  the  New  Orleans,  Jackson  and  Great  Northern 
or  by  western  lines  like  the  Ohio  and  Mississippi,  and  it  enabled 
the  Illinois  Central  not  only  to  finish  the  work  within  the  limits 
set  by  the  charter,  but  also  to  carry  on  the  enterprise  at  a  com- 
paratively low  cost.68 

of  March  isth,  1853: —  "Permission  is  given  the  Illinois  Central  Railroad 
(by  the  city  of  Galena)  to  lay  down  and  operate  a  road  through  the  city 
upon  a  prescribed  line,  by  locomotive  engines.  Permission  was  given 
the  company  to  bridge  Galena  river  within  the  limits  of  the  city  and  a 
portion  of  the  levee,  three  hundred  feet  in  length,  was  appropriated  for 
their  use.  The  usual  regulations  in  regard  to  use  of  streets,  etc.  were  in- 
serted. The  company  will  spend  $10,000  under  the  direction  of  the  city 
authorities  for  dredging  the  stream  in  front  of  the  depot  grounds." 

67As  stated  in  Chapter  vi,  the  assignment  did  not  affect  the  credit  of 
the  Illinois  Central  to  any  great  extent.  The  great  bulk  of  the  construction 
work  was  finished  in  1855 ;  the  floating  debts  that  could  not  be  met  were 
only  indirectly  related  to  contracts  for  construction. 

68In  Chapter  vi  a  statement  is  made  that  the  company  was  forced  to 


58  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [342 

Nevertheless,  the  management  in  Illinois  was  involved  in 
several  difficulties  during  this  period.  The  most  important  re- 
lated to  the  contracts  for  material  and  labor.  Tlie  road  was  let 
to  contractors  in  the  spring  and  summer  of  1852,  and  at  that 
time  Illinois  Central  seven  per  cent  bonds  were  selling  at  a  slight 
premium.  Accordingly,  the  directors  stipulated  that  the  terms 
for  all  work  be  one-half  cash  and  one-half  seven  per  cent  bonds 
at  par.69  This  arrangement  was  accepted,  and  the  first  payments 
were  made  on  such  a  basis.  The  contracts  were  also  based  on 
the  prices  prevailing  in  1852,  and  on  account  of  the  competition 
between  bidders  they  were  taken  at  low  figures.  During  1853 
and  1854  the  price  of  bonds,  materials,  and  labor  remained  ap- 
proximately the  same  as  in  1852.  But  about  the  time  of  the 
Schuyler  frauds  various  influences  combined  to  depress  the  quo- 
tations of  Illinois  Central  bonds,  while  rising  prices  increased 
the  cost  of  railroad  supplies  and  labor  throughout  the  entire 
country.  This  was  especially  severe  in  Illinois  on  account  of  the 
large  amount  of  railroad  construction  and  the  abundant  crops, 
which  made  enormous  demands  for  unskilled  labor.  Naturally, 
the  contractors  were  unwilling  to  stand  the  decline  in  bonds  and 
increased  cost  of  construction,  and  asked  for  additional  compen- 
sation from  the  company.  Where  definite  contracts  had  been 
made  the  management  refused  to  make  any  radical  changes. 
Most  of  the  contractors,  however,  had  taken  up  the  work  in  such 
a  way  that  the  company  could  not  force  them  to  continue  at  the 
old  terms,  or  else  did  not  feel  it  desirable  to  do  so.  Under  the 
circumstances,  the  provision  making  half  payment  in  bonds  was 
not  carried  out,  and  the  payments  to  the  contractors  were  largely 
increased.  In  spite  of  this  reasonable  action  by  the  railroad 
many  contractors  surrendered  their  contracts  and  threw  the 
unfinished  work  back  upon  the  company.70 

pursue  a  hand-to-mouth  financial  policy.  This  was  true;  at  the  same 
time  there  were  always  sufficient  funds  in  the  treasury  to  meet  the  con- 
tracts when  due.  The  condition  was  similar  to  what  occasionally  exists 
on  any  large  railroad  when  financial  stringencies  prevent  the  floating  of 
Jaonds  at  favorable  terms  and  the  company  is  forced  to  sell  short  term 
note*  at  a  discount.  However,  this  lack  of  funds  very  seldom  affects 
employees  of  the  company  or  creditors,  although  it  does  make  any  new 
work  more  expensive  on  account  of  the  difficulty  of  obtaining  cash. 

"Chicago  Daily  Democrat,  March  25,  1852;  also  advertisements. 

™C<*iro  Mirror  and  City  Directory,  1864,  1865;  letter  of  W.  H. 
Osborn,  dated,  N.  Y.,  Oct.  16,  1855,  quoted  in  Railway  Times,  November 
10,  1855 ;  official  communication  from  the  Board  of  Directors,  dated 
November  7,  1854,  quoted  in  Railway  Times,  November  25,  1854;  Satter- 


343]  CONSTRUCTION   OF    CHARTER   LINES  59 

In  most  of  these  cases  the  directors  did  not  enter  into  new 
contracts,  but  carried  on  the  work  under  its  own  division  super- 
intendents. The  portions  of  the  line  surrendered  were  the  most 
difficult,  and  the  responsibility  placed  upon  the  company's  engi- 
neers was  large.  The  most  important  of  these  divisions  were 
the  ones  from  Cairo  to  Carbondale,  and  those  near  Decatur.71 
But  the  same  difficulties  which  enhanced  the  cost  to  the  con- 
tractors made  the  work  more  expensive  for  the  company.  As 
most  of  the  responsible  work,  such  as  bridges,  trestles,  buildings, 
culverts,  and  the  heaviest  pieces  of  grading,  was  performed 
directly  by  the  railroad  the  advance  in  prices  had  an  important 
effect.  As  high  as  $1.50  per  day  was  paid  for  ordinary  section 
labor  and  proportionate  wages  for  skilled  workmen.72  The  re- 
sult of  greater  wages  and  prices  on  company  work  and  larger 
compensation  for  contractors  was  a  general  advance  in  the  cost 
of  building  the  road,  amounting  to  several  millions  of  dollars. 
The  estimate  made  by  Colonel  Mason  was  found  to  be  much  too 
low.  At  about  the  same  time  between  one  and  two  million  of 
bonds,  taken  by  contractors  in  1852  and  1853,  were  returned 
to  the  company  in  such  a  way  that  the  market  for  Illinois  Cen- 

thwaite's  Report,  Railway  Times,  July  22,  1854.  The  greatest  difficulty  was 
experienced  in  the  division  north  of  Cairo  and  near  Decatur. 

The  Illinois  Central  profited  by  the  depression  and  fluctuations  in 
prices  of  labor  and  supplies.  The  following  statements  taken  from  the 
report  of  Mr.  F.  E.  Satterthwaite,  American  correspondent  of  the  Rail- 
way Times,  in  the  number  for  July  22,  1854,  are  interesting:  "The  first 
thing  done  was  to  buy  the  iron  for  the  whole  road  at  $45  per  ton  for 
bonds  at  par.  In  six  month  after  the  purchase  the  value  of  iron  doubled, 
by  which  the  company  saved  $1,500,000.  The  high  character  of  the  com- 
pany and  the  rapid  progress  of  the  road  commanded  confidence  so  that 
the  company  was  enabled  to  sell  the  whole  of  the  $17,000,000  at  par  (sic), 
with  the  exception  of  the  February  (1854)  issue.  The  sales  were  made 

payable  in  instalments  which  will  be  completed  in  July  next " 

Mr.  Satterthwaite  undoubtedly  exaggerates  the  profits  made  from  buying 
the  iron  and  other  supplies,  nevertheless  the  saving  was  considerable. 
For  instance,  the  N.  O.  J.  &  G.  N.  paid  $85  per  ton  for  poorer  rails  than 
those  for  which  the  Illinois  Central  paid  $45,  but  this  was  affected 
slightly  by  the  lack  of  confidence  in  the  southern  road.  There  was  also 
some  saving  made  in  contracts,  which  the  contractors  were  forced  to 
live  up  to. 

71Cairo  Mirror  and  City  Directory,  1864,  1865 ;  official  communica- 
tion from  the  Board  of  Directors,  November  7,  1854,  quoted  in  Railway 
Times,  November  25,  1854. 

"Ibid. 


60  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [344 

tral  securities  was  depressed  and,  consequently,  it  was  harder  to 
secure  money.73 

Aside  from  these  difficulties,  the  management  had  little  to 
contend  with  beyond  the  general  engineering  problems  involved 
in  such  an  extensive  enterprise.  The  prairies  of  Illinois  offered 
an  almost  ideal  location  for  a  railroad,  and  except  for  somewhat 
difficult  construction  on  three  or  four  divisions,  the  building  of 
the  road  proceeded  without  serious  delays.  Even  in  the  bluffs 
along  the  Illinois  and  Cache  rivers  the  engineering  problem  was 
extremely  simple  compared  with  the  building  of  the  Union 
Pacific  or  many  eastern  lines.  The  greatest  trouble  was  found 
in  the  distance  of  the  work  from  the  older  parts  of  the  country 
and  in  high  cost  of  transportation.  The  labor  problem  was 
solved  by  the  employment  of  foreign  laborers,  largely  Irish.  In 
fact  the  road  was  built  almost  entirely  by  this  class  of  workmen. 
At  one  time  nearly  ten  thousand  men  were  working  on  the  road, 
but  the  need  of  help  on  the  farms  and  demand  by  other  railroads 
prevented  the  "Central"  from  keeping  all  the  men  it  needed. 
Rails,  bridge  iron,  equipment,  and  other  railroad  materials  were 
carried  from  the  eastern  states  and  England  to  Cairo,  Chicago, 
and  Dunleith  by  water.  From  those  places  they  were  either 
hauled  by  wagon  across  the  country  or  else  carried  on  the  rivers, 
the  canal,  and  the  Galena  and  Chicago  Union  railway  as  near 
the  construction  work  as  possible  and  then  hauled  by  wagon. 
This  method,  at  best,  was  slow  and  expensive,  and  resulted  in 
considerable  delay.  Supplies  for  the  men  were  hauled  long  dis- 
tances by  teams,  as  most  of  the  country  through  which  the  road 
went  was  sparsely  settled. 

By  the  1st  of  January,  1855,  all  the  main  line  and  over 
half  of  the  Galena  and  Chicago  branches  were  in  operation.74 

73Most  of  the  bonds  taken  by  contractors  were  returned  to  the  com- 
pany after  the  Schuyler  frauds,  when  the  price  of  seven  percents  had 
dropped  to  64. 

74The  following  "History  of  Construction"  is  taken  from  the  Chicago 
Daily  Democratic  Press,  being  quoted  in  the  American  Railroad  Journal, 
October  25,  1856: — "Published  contracts  were  first  made  in  June,  1852, 
and  the  grading  of  the  1st,  2nd,  6th,  8th,  9th,  and  loth  divisions  let.  On 
the  I4th  of  October  following  the  3rd,  4th,  5th,  7th,  nth,  and  I2th  were 
put  under  contract.  In  July  the  first  instalment  of  the  first  English  loan 
was  paid  and  it  was  not  until  this  payment  had  been  made  that  the  orig- 
inators of  the  enterprise  had  confidence  in  its  success.  In  March,  1853, 
Colonel  Mason  was  elected  Superintendent.  On  the  i6th  day  of  May  the 
first  sixty  miles  of  the  Illinois  Central  from  La  Salle  to  Bloomington  was 


345]  CONSTRUCTION   OP    CHARTER   LINES  61 

During  the  next  six  months  the  remainder  of  the  Galena  branch, 
and  the  Chicago  branch  as  far  south  as  Mattoon,  were  finished, 
leaving  only  the  line  from  the  St.  Louis  and  Terre  Haute  Rail- 
road to  Centralia,  seventy-seven  miles,  incomplete.76  The  finan- 
cial difficulties  in  1855,  lack  of  labor,  and  the  fact  that  the  com- 
pany already  had  a  connection  with  the  main  line  by  way  of  the 
Great  "Western  from  Tolono  to  Decatur  and  by  the  Terre  Haute 
road  from  Mattoon  to  Pana,  made  it  unadvisable  to  finish  the 
work  before  September,  1856.76  The  last  rail  was  laid  on  Sep- 
tember 26. 

Although  formally  opened  in  September,  1856,  the  railroad 
was  only  partially  completed.  Many  of  the  station  buildings 
were  not  built,  fencing,  ballasting,  construction  of  levees  and 
piling  at  Chicago,  Cairo,  La  Salle,  and  Dunleith  were  incomplete, 
and  much  of  the  bridge  and  culvert  work  was  of  a  temporary 
nature.  The  equipment  was  also  inadequate.  Thus,  the  expen- 
ditures during  the  fall  of  1856  and  during  1857  were  very  large. 
By  the  close  of  the  latter  year  everything  was  finished,  and 

opened  for  business,  and  the  company  commenced  working  the  road  on 
its  own  account.  The  following  are  the  dates  of  opening  by  sections : — 

MAIN  LINE,  CAIRO  TO  LA  SALLE,  308  MILES. 


LaSalle  to  Bloomington 

60  miles 

May  16,  1853. 

Bloomington  to  Clinton 

23       " 

March  14,  1854. 

Clinton  to   Decatur 

22         " 

October  18,  1854. 

Cairo  to  Sandoval 

118      " 

November  22,  1854. 

Decatur  to  Sandoval 

85      " 

January  i,  1855. 

GALENA  BRANCH, 

LA  SALLE  TO  DUNLEITH,  146  MILES. 

Mendota  to  La  Salle 

16  miles 

November  14,  1853. 

Freeport  to  Warren 

25      " 

January  9,    1854. 

Warren  to  Scales  Mound 

14       " 

September   n,   1854. 

Scales    Mound   to   Galena 

12         " 

October  30,  1854. 

Mendota  to  Freeport 

62         " 

February  i,  1855. 

Galena  to  Dunleith 

17       " 

June  12,  1855. 

CHICAGO  BRANCH, 

CHICAGO  TO  CENTRALIA,  250  MILES. 

Chicago  to  Calumet 

14  miles 

May  15,  1852. 

Calumet  to  Kankakee 

42      " 

July  11,  1853. 

Kankakee  to  Spring  Creek  31  December  2,  1853. 

Spring  Creek  to  Pera  22  "  May  18,  1854. 

Pera  to  Urbana  20  "  July  24,  1854. 

Urbana  to  Mattoon  44  "  June  25,  1855. 

Mattoon  to  Centralia  77  "  September  27,   1856." 

15Anterican  Railroad  Journal,  October  25,  1856. 


62  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [346 

further  construction  work  was  confined  to  extensions  and  to 
providing  for  the  demands  of  increasing  traffic.77 

Compared  with  the  present  charter  lines  of  the  Illinois 
Central,  the  construction  was  poor  and  the  equipment  was 
very  inadequate.  Only  a  portion  of  the  road  was  ballasted 
with  gravel,  none  with  stone.  The  embankments  were  narrow 
and  the  roadbed  was  greatly  inferior  to  present  Illinois  Central 
standards.  Bridges,  culverts,  and  trestles  were  weak  and  un- 
adapted  to  heavy  loads.  Freight  houses  were  poorly  arranged, 
and  the  terminal  yards  were  mere  collections  of  tracks,  without 
any  definite  system.  Locomotives,  both  freight  and  passenger, 
were  light,  the  heaviest  weighing  only  thirty  tons,  and  all  used 
wood  instead  of  coal.  Eight  tons  was  the  maximum  load  for 
freight  cars,  while  the  proportion  of  tare  to  net  load  was  about 
one  to  one.  In  1857  most  of  the  coal,  and  some  of  the  house  cars, 
had  only  a  single  pair  of  trucks,  while  those  possessing  two 
trucks  were  classed  as  two  cars.  The  passenger  equipment 
lacked  most  of  the  conveniences  now  regarded  as  essential — 
steam  heat,  air  brakes,  ventilators,  improved  springs,  automatic 
couplers,  vestibules,  good  lights.  No  sleeping  cars  were  included 
in  the  equipment  of  the  road  when  finished.78 

However,  the  Illinois  Central,  in  1857,  was  the  best  built 
railroad  in  the  West  and  as  good  as  most  eastern  lines.  The 
total  cost  of  construction  was  $26,568,017.61,  or  $37,600  per 
mile,  of  which  some  twenty-one  millions  were  expended  on  road- 
way, buildings,  etc.79  In  no  sense  of  the  word  could  the  con- 
struction work  be  regarded  as  temporary.  Buildings  were  of  a 
permanent  character,  generally  stone  or  brick.  The  roadbed 
was  well  built,  according  to  the  standards  of  the  time,  and  was 
laid  with  sixty  pound  iron  T  rails,  placed  on  chairs.80  Sidings 
were  ample  for  the  traffic  of  the  period,  and  much  of  the  line 
was  adapted  for  double  tracking.  Bridges  were  made  of  iron, 
with  stone  abutments,  and  the  culverts  were  generally  built  of 
stone.  The  line,  following  the  original  surveys,  was  straight  and 
free  from  heavy  grades  or  sharp  curves.  Terminal  facilities 
were  ample  and  permitted  extensive  additions  without  a  large 
expenditure  for  land  or  right  of  way.  The  equipment  was  more 
than  sufficient  for  the  needs  of  the  railroad  when  completed. 

77 Annual  Report,  Illinois  Central  Railroad,  1855-1857. 
™Ibid.;  cf.  Ringwalt,  Development  of  Transportation  Systems  in  the 
United  States. 

"Cf.  Chap.  vi. 

••The  rails  were   of   exceptionally  good  material   and  according  to 


347]  CONSTRUCTION   OF    CHARTER   LINES  63 

Both  locomotives  and  freight  and  passenger  cars  were  up  to  the 
highest  standards  of  the  period  and,  with  slight  exception,  the 
rolling  stock  was  entirely  new.  On  the  whole,  the  railroad  con- 
formed to  the  provisions  of  the  charter,  and  "was  made  equal, 
in  all  respects,  to  the  road  leading  from  Boston  to  Albany, 
usually  known  as  the  Great  Western,  with  such  improvements 
as  experience  has  shown  to  be  expedient."81 

Mr.  Ackerman  some  of  them  were  in  use  as  late  as  1881. 
"Charter,  Illinois  Central  Railroad,  sec.  15,  ff  3. 


CHAPTER   IV. 

CONSTRUCTION  AND  DEVELOPMENT,  1857  TO  1870. 

The  construction  of  the  roadbed  and  buildings  and  the  pur- 
chase of  rolling  stock  were  merely  the  first  step  in  the  develop- 
ment of  the  Illinois  Central  System.  Traffic  had  to  be  secured, 
markets  found  for  the  products  of  the  territory  tributary  to  the 
railroad,  and  the  agricultural  and  manufacturing  interests  of 
that  region  stimulated ;  an  operating  organization  was  necessary 
and  provision  had  to  be  made  for  the  rapid  and  economical 
handling  of  both  freight  and  passenger  business.  As  further 
steps  there  came  the  formation  of  traffic  alliances  with  connect- 
ing or  branch  railroads,  trackage  agreements  for  the  use  of  cer- 
tain desirable  pieces  of  track,  organization  and  maintenance  of 
pools  and  similar  arrangements,  and  finally  the  physical  exten- 
sion of  the  railroad  through  the  lease  of  old  lines  or  the  con- 
struction of  new.  These  were  the  problems  before  the  manage- 
ment, in  1857,  and  their  solution  is  the  real  history  of  the 
company. 

The  organization  of  the  various  departments  was  developed 
gradually.  During  the  first  three  years  of  construction  the 
operating  side  was  handled  by  the  Chief  Engineer,  Mr.  Mason, 
and  the  net  receipts  from  the  traffic  went  directly  into  the 
construction  account.  Later  Mr.  Mason  was  made  general  super- 
intendent, and  a  separate  operating  department  was  created.1 
In  1856  Mr.  Arthur  was  made  general  superintendent,  in  place 
of  Mr.  Mason,  who  resigned,2  and  he,  in  turn,  was  succeeded  by 
George  B.  McClellan,  Commander  in  Chief  of  the  federal  armies 
during  a  part  of  the  Civil  War.  By  1855  most  of  the  road  was 
completed  and  the  traffic  was  large  enough  to  make  a  complete 
operating  organization  necessary.  Accordingly  traffic,  mainte- 
nance of  way  and  equipment,  operating,  financial,  and  legal 
departments  were  established  under  the  supervision  of  the  gen- 
eral superintendent.  The  president  did  not  transfer  his  offices 
to  Illinois  until  several  years  after  the  construction  of  the  road 
and  the  board  of  directors  has  always  kept  New  York  as  its 

1Ackerman,  Early  Illinois  Railroads,  p.  43. 
2Ibid.,  p.  44. 

64 


349]  DEVELOPMENT,  1857-1870  65 

official  meeting  place.  For  that  reason  it  was  necessary  to  have 
some  ranking  executive  officer  in  Chicago,  and  Mr.  Arthur,  Mr. 
McClellan,  and  their  successors  in  the  office  of  general  superin- 
tendent had  full  charge  of  all  operating  matters,  subject,  of 
course,  to  the  approval  of  the  president  and  board  of  directors. 
Otherwise  the  organization  of  the  railroad  was  similar  to  that 
of  other  companies  doing  the  same  kind  of  work. 

As  soon  as  a  stretch  of  track  was  completed,  freight  and 
passenger  service  was  commenced.  In  the  passenger  department 
the  standard  service  was  two  trains  a  day  in  each  direction  over 
all  important  sections  of  the  road.  In  addition  such  extra  trains 
were  run  as  the  traffic  demanded,  but  from  1857  to  1870  this 
standard  of  two  trains  a  day  in  each  direction  was  maintained.3 
The  freight  traffic  was  more  irregular  and  the  service  conformed 
to  the  special  needs  of  the  season.4  As  freight  traffic  developed, 
it  became  necessary  to  increase  the  number  of  trains  until  by 
1870  there  was  an  average  of  five  freight  trains  a  day  in  each 
direction.5  By  that  time  most  of  the  mixed  trains  had  been 
taken  off,  and  the  separation  of  the  two  branches  was  complete. 
In  addition  to  the  regular  passenger  service  the  company  estab- 
lished a  suburban  service  from  Hyde  Park  and  later  from  towns 
as  far  south  as  Kensington  to  Chicago.6  From  the  commence- 
ment of  passenger  service  the  trains  carried  both  mail  and 
express.  According  to  the  federal  act  of  September  20th,  1850, 
the  railroad  was  obliged  to  carry  what  mail  the  Post  Office 
Department  directed  on  terms  prescribed  by  Congress.7  Mail 
was  handled  on  all  regular  trains,  and  the  Illinois  Central  be- 
came one  of  the  most  important  arteries  of  the  Post  Office 
Department.  The  Adams  Express  company  was  given  a  mo- 
nopoly of  the  express  business  in  1856,  and  a  regular  system 
was  installed.8 

Even  before  trains  were  put  in  operation  it  was  necessary 
to  issue  tariffs.  Bate  matters,  however,  were  in  a  chaotic  condi- 
tion and  no  formal  tariff  sheets  were  printed.  In  some  respects 
the  regulations  as  to  the  making  of  rates  were  much  stricter 
than  in  later  years.  The  number  of  different  rates  was  small 
and  it  was  an  easy  matter  for  the  general  superintendent  or 
even  the  president  to  adjust  the  charges  personally.  Most  ship- 

*Annual  Report,  Illinois  Central  Railroad,  1855-1870. 

*Ibid.,  1855-1859- 

*Ibid.,  1870. 

«/&«/.,  1856. 

7 Act  of  September  20,  sec.  6. 

^Annual  Report,  Illinois  Central  Railroad,  1856. 


66  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [350 

pers  regarded  railway  rates  in  the  same  light  as  ordinary  busi- 
ness transactions — a  matter  of  individual  bargaining,  and  tariffs 
were  often  adjusted  by  the  local  station  agent.9 

The  railroad  was  just  getting  the  various  departments  well 
organized  when  the  development  of  the  road  and  the  country 
tributary  to  it  was  arrested  by  the  panic  of  1857,  the  assignment 
of  that  year,  and  a  series  of  droughts  and  crop  failures.  The 
traffic  of  1856  and  the  early  part  of  1857  promised  a  rapid 
development  of  the  business  of  the  company.10  In  the  last  three 
or  four  months  of  1857  shipments  and  earnings  decreased  con- 
siderably. The  next  year,  1858,  a  severe  drought  ruined  much 
of  the  corn  and  wheat,  and  in  1859  prices  for  grain  were  so  low 
that  the  farmers  did  not  find  it  profitable  to  market  their  corn 
and  wheat.11  Instead  of  the  income  of  the  road  increasing  it 
actually  declined  in  these  two  years,  and  the  net  revenue  did 
not  provide  for  a  third  of  the  interest  charges  accruing  during 
the  period.12  New  construction  work  was  suspended,  purchases 
of  equipment  cancelled,  and  maintenance  work  reduced  as  much 
as  practicable,  but  even  these  savings  did  not  prevent  the 
decrease  in  net  earnings.  The  shareholders  were  forced  to  pay 
assessments  on  their  stock,  and  the  railroad  received  a  setback 
which  was  not  overcome  for  three  or  four  years.13 

By  1860  conditions  were  again  normal,  and  the  first  few 
months  of  1861  were  the  most  profitable  the  company  had  en- 
joyed to  that  time.  But  this  prosperity  was  temporarily  checked, 
this  time  by  the  commencement  of  the  Civil  "War.  State  troops 
were  rushed  to  Cairo  the  first  week  in  May,  and  during  the  next 
four  years  the  regular  business  of  the  railroad  was  constantly 
interrupted  by  the  demands  of  the  Government.1*  The  outbreak 
of  hostilities  destroyed  southern  shipments  of  grain  and  mer- 
chandise from  Cairo  and,  for  a  time,  checked  the  growth  of 
Illinois.  Traffic  declined  and  the  officials  of  the  company  were 
left  without  plans  on  account  of  the  rapid  change  in  affairs. 
At  the  same  time  the  working  force  of  the  company  was  disor- 
ganized by  the  enlistment  of  men  in  the  army  and  the  sudden 
demands  of  the  War  Department  for  transportation  of  troops 
or  supplies.15  Thousands  of  men  were  sent  south  to  Ca:":o  via 
the  railroad,  and  immense  quantities  of  grain,  meat,  ammuni- 

9Statement  of  station  agent  at  Calumet,  1857. 

^Annual  Report,  Illinois  Central  Railroad,  1855-1857. 

"Ibid.,  1858.  1859. 

12Ibid. 

13Ibid.,  1860. 

™Ibid.,  1861-1865. 

islbid.;  Ackerman,  Early  Illinois  Railroads,  pp.  45,  46. 


351]  DEVELOPMENT,    1857-1870  67 

tion,  and  other  materials  for  the  armies  were  forwarded  in  the 
same  direction.  In  all  cases  precedence  was  given  to  trains 
carrying  troops  or  government  supplies,  and  the  regular  work- 
ing of  the  road  was  constantly  delayed.  Moreover,  these  sudden 
calls  reduced  the  amount  of  equipment  available  for  other  uses, 
and  the  company  was  compelled  to  pay  heavy  damages  for 
failure  to  furnish  cars.16 

Nevertheless,  the  war  aided  the  railroad  more  than  it  dam- 
aged it.  The  development  of  manufacturing  in  the  eastern  states 
and  the  needs  of  the  army  created  a  demand  for  the  products  of 
Illinois  and  several  times  as  much  grain  was  handled  during  the 
closing  years  of  the  war  as  in  1857  to  1860.  Furthermore,  the 
army  traffic  was  profitable,  although  the  provisions  of  the  land 
grant  act  and  the  charter  compelled  the  company  to  carry  both 
troops  and  supplies  at  reduced  rates.  From  1862  until  the  close 
of  the  war  the  railroad  was  utterly  unable  to  handle  the  freight 
offered  it.17  As  a  result  both  gross  and  net  earnings  increased 
more  than  two  fold  during  the  conflict,  and  in  1865  they  were 
sufficient  to  provide  for  dividends  on  all  the  stock  outstanding.18 
The  same  influences  which  brought  about  the  traffic  development 
of  tne  Civil  War  period  produced  an  even  greater  growth  in  the 
next  five  years,  and  the  earnings  of  1869  and  1870  were  well 
ahead  of  those  of  any  previous  years.19 

On  the  other  hand  the  Civil  War  made  impossible  the  use 
of  the  north  and  south  trade  routes.  The  Illinois  Central  was 
primarily  a  north  and  south  railroad  and  the  officials  of  the 
company,  in  1859  and  1860,  had  managed  to  build  up  a  fairly 
lucrative  trade  with  the  southern  Mississippi  valley  states.  But 
during  the  war  the  grain  traffic  of  the  West  was  sent  east  to 
the  Atlantic  seaboard.  When  the  war  was  over  the  resources  of 
the  south  were  gone,  and  the  company  was  unable  to  revive  its 
north  and  south  business  for  a  number  of  years.20  The  pros- 
perity of  the  period  under  discussion  was  unnatural,  and  events 
occurring  after  1870  inflicted  serious  damage  upon  the  company. 

Most  of  the  growth  of  business  from  1857  to  1870  occurred 
on  the  charter  lines  of  the  company,  but  it  was  aided  by  a  num- 
ber of  extensions  and  traffic  alliances  made  at  various  times. 
The  Illinois  Central  was  built  in  the  shape  of  a  Y  and  in  fact 

^Annual  Report,  Illinois  Central  Railroad,  1865. 
"Ibid.,  1862-1865. 
18/fetU,  1865. 
™Ibid.,  1869,  1870. 

20Ibid.,  1861  ff.;  Report  of  the  Delegates  Appointed  by  the  English 
and  Dutch  Shareholders,  1877. 


68  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [352 

consisted  entirely  of  main  line,  although  the  portion  from  Chi- 
cago to  Centralia  and  from  Dubuque  to  La  Salle  were  then 
classed  as  branches.  As  a  result  the  territory  directly  tributary 
was  confined  to  the  limited  area  within  fifteen  or  twenty  miles 
of  the  tracks.  Moreover,  there  was  no  connection  between  the 
Chicago  branch  and  the  main  line,  resulting  in  great  inconveni- 
ence to  the  company.  As  a  remedy  for  the  first  of  these  evils 
the  company,  from  1855  to  1870,  built  up  a  system  of  semi-sub- 
sidiary branch  lines.  Until  after  1860  the  Illinois  Central  was 
the  largest  and  strongest  railroad  in  the  central  "West  and,  there- 
fore, was  in  a  position  to  assist  smaller  roads.  In  pursuance  of 
such  a  policy,  the  railroad,  either  by  direct  action  of  the  directors 
or  else  through  the  personal  efforts  of  individual  members,  helped 
several  east  and  west  lines.  Among  the  most  important  were 
the  Great  Western  (now  the  Wabash)  from  the  Mississippi  to 
Danville;  the  Terre  Haute,  Alton  and  St.  Louis  (St.  Louis  Divi- 
sion of  the  C.  C.  C.  &  St.  L.)  from  Alton  to  Terre  Haute;  the 
Ohio  and  Mississippi  (Baltimore  and  Ohio  Southwestern)  from 
Illinoistown  (E.  St.  Louis)  to  Cincinnati;  and  the  Mineral  Point 
(Chicago,  Milwaukee  and  St.  Paul).21  All  of  these  have  devel- 
oped into  important  east  and  west  main  line  roads,  but  from 
1855  to  1865  or  1866  the  cost  of  rail  transportation  made  it 
impossible  for  them  to  carry  grain  from  Illinois  eastward.  More- 
over, several  of  the  companies  were  without  eastern  connections 
until  the  early  sixties. 

In  addition  to  the  transverse  or  semi-branch  roads  the  Illi- 
nois Central  lent  its  aid  to  four  other  companies  in  an  effort  to 
establish  a  connection  between  the  two  arms  of  the  system.  In 
1852  or  1853  an  arrangement  was  made  with  the  Galena  and 
Chicago  Union,  by  which  the  latter  should  not  build  its  line 
beyond  Freeport,  but  instead  should  use  the  tracks  of  the  ' '  Cen- 
tral", while  the  latter  should  have  trackage  rights  over  the  for- 
mer's line  from  Freeport  to  Chicago.22  From  1854  to  1858  or 
1859  this  connection  proved  of  great  service  to  the  company. 
But  about  1857  disputes  arose  between  the  two  railroads,  and 
the  Illinois  Central  was  able  to  make  more  advantageous  arrange- 
ments with  the  Chicago  and  Northwestern  at  Dixon  and  later 
with  the  Chicago  and  Burlington  at  Mendota.23  None  of  these 
agreements  allowed  the  "Central"  any  profit  on  the  transfer  of 
freight  between  the  branches,  while  the  movement  of  equipment 

"Annual  Report,  Illinois  Central  Railroad,  1855-1870. 
"Ibid. 

2*Ibid.,  1857-1860.     The  cars  were  hauled  through  without  breaking 
bulk. 


353]  DEVELOPMENT,  1857-1870  69 

was  handicapped.  The  result  was  a  third  attempt  to  establish  a 
satisfactory  connection.  This  time  it  assisted  the  Logansport, 
Peoria,  and  Burlington,  later  the  Peoria  and  Oquaka,  (now  the 
Toledo,  Peoria  and  Western  branch  of  the  Pennsylvania  sys- 
tem) in  floating  its  loans,  took  part  of  the  company's  bonds  and 
secured  trackage  rights  from  El  Paso  to  Oilman.  The  terms 
were  favorable  to  the  "Central"  and  the  arrangement  was  made 
permanent  by  a  provision  that  a  certain  percent  of  the  gross 
earnings  of  interchange  business  should  be  invested  in  Peoria 
and  Oquaka  bonds.24  Through  trains  were  run  from  the  main 
line  to  the  branch  and  the  arrangement  was  so  satisfactory  that  it 
was  continued  until  the  company  built  its  own  line.  At  various 
times  prior  to  1860  the  tracks  of  the  Great  "Western,  Terre  Haute, 
Alton  and  St.  Louis,  and  Ohio  and  Mississippi,  were  used  to  pro- 
vide a  connection  between  the  two  parts  of  the  system,  but  these 
arrangements  were  merely  temporary.25 

In  addition  to  the  agreements  mentioned  above,  the  Illinois 
Central  had  close  relations  with  the  Terre  Haute,  Alton  and  St. 
Louis.  As  soon  as  that  line  was  built  from  Alton  to  Pana,  a 
trackage  agreement  was  made  by  which  through  trains  were  run 
from  Chicago  to  St.  Louis.  In  fact  the  Terre  Haute-Illinois 
Central  line  was  the  first  through  line  between  those  cities. 
Solid  trains  were  handled,  besides  coaches  and  sleepers.26  The 
distance  by  this  route  was  not  much  longer  than  over  the  St. 
Louis,  Alton  and  Chicago  and  it  was  regarded  as  an  important 
rival  of  the  latter,  especially  from  1857  to  I860.27  Towards  the 
close  of  the  period  a  further  connection  was  established  between 
the  Illinois  Central  and  St.  Louis  by  way  of  the  Belleville,  South- 
ern Illinois,  and  Du  Quoin.  The  latter  company,  a  lessee  of  the 
Terre  Haute  company,  was  finished  in  1869,  and  through  con- 
nections were  immediately  established.  Three  express  trains  a 
day  in  each  direction  were  run  from  St.  Louis  to  Cairo,  and  the 
"Cairo  Short  Line"  as  it  was  termed  proved  profitable  for  both 
companies.28 

While  these  arrangements  were  of  great  value  to  the  Illinois 
Central,  it  made,  the  serious  mistake  of  pursuing  a  too  conserva- 
tive course.  Several  of  the  roads,  for  example,  the  Mineral 
Point,  Great  Western,  Peoria  and  Oquaka,  and  Chicago,  Fulton 

-^Annual  Report,  Illinois  Central  Railroad,  1858-1860. 

2*Ibid.,  1855-1857- 

2QIbid.,  1856  ff;  cf.  advertisements  in  St.  Louis  newspapers. 

"Ibid. 

28Railroad  Gazette,  II,  252. 


70  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [354 

and  Iowa  (Northwestern)  could  have  been  leased  or  purchased 
on  favorable  terms.  If  this  had  been  done  it  would  have  pre- 
vented their  development  into  rival  systems,  and  would  also  have 
furnished  the  ''Central"  with  the  necessary  branches.  Instead, 
loose  traffic  agreements  were  made  and  all  of  these  lines  grew 
into  strong  competitors,  while  the  Illinois  Central  in  1870  had 
practically  no  branches  or  connecting  lines.29 

There  was  one  exception  to  this  statement.  Of  all  the  rail- 
roads connected  with  the  "Central"  from  1856  to  1870  only  one 
became  a  permanent  part  of  its  system.30  This  was  the  Dubuque 
and  Sioux  City  Eailroad  of  Iowa.  Originally  chartered  as  the 
Dubuque  and  Pacific,  before  the  Civil  War,  it  was  finished  dur- 
ing that  period,  being  built  westward  from  Dubuque.31  As  soon 
as  a  short  portion  beyond  Dubuque  was  finished  a  traffic  agree- 
ment was  made  with  the  Illinois  Central  for  mutual  exchange  of 
freight.32  Both  roads  developed  rapidly,  and  by  1867  this  inter- 
change of  freight  was  of  considerable  value,  especially  to  the 
Illinois  Central.33  At  first  the  "Central"  was  the  only  com- 
pany connecting  the  Iowa  company  with  Chicago  or  Milwaukee, 
but  in  1866  and  1867  other  railroads,  principally  lines  now 
forming  the  Chicago,  Milwaukee  and  St.  Paul  system,  made 
traffic  agreements  with  the  Dubuque  and  Sioux  City,  and  threat- 
ened to  divert  its  traffic  to  Milwaukee.3*  In  order  to  prevent  the 
loss  of  such  a  valuable  feeder,  the  directors  of  the  Illinois  Central 
leased  the  Iowa  lines  for  twenty  years,  the  first  ten  at  thirty  five 
per  cent  of  the  gross  earnings  and  the  next  ten  at  thirty  six  per 
cent,  with  the  right  of  perpetual  lease  at  the  latter  figure.35 

But  the  Dubuque  and  Sioux  City  was  building  branch  lines 
by  means  of  two  subsidiary  companies,  the  Iowa  Falls  and  Sioux 
City  and  the  Cedar  Falls  and  Minnesota.  To  obtain  the  parent 
company  it  was  necessary  to  lease  the  branch  lines  on  the  latter 's 
own  terms.  The  Dubuque  and  Sioux  City  was  built  by  persons 
closely  connected  with  the  Credit  Mobilier  and  the  Union  Pacific, 
and  they  applied  similar  methods  to  the  construction  of  the  Iowa 

2gReport  of  the  Delegates  Appointed  by  the  English  and  Dutch  Share- 
holders, 1877. 

30Except  Belleville  and  Southern. 

^Annual  Report,  Dubuque  and  Sioux  City  Railroad,  May  31,  1864. 

S2Ibid. 

**Annual  Report,  Iowa  State  Agricultural  Society,  1861  ff.  American 
Railroad  Journal,  March  20,  1858. 

34Dubuque  newspapers,  1865-1867. 

3sAnnual  Report,  Illinois  Central  Railroad,   1867. 


355]  DEVELOPMENT,    1857-1870  71 

company.36  A  majority  of  the  board  of  directors  of  the  Dubuque 
corporation  organized  the  Iowa  Falls  and  Sioux  City  Railroad 
Company  and  also  a  construction  company,  with  which  the  rail- 
road company  made  a  contract  to  build  the  road  in  return  for 
a  certain  amount  of  stocks  and  bonds  per  mile  of  line.  Then 
as  directors  of  the  Dubuque  and  Sioux  City  they  leased  their 
own  road,  before  it  was  constructed,  to  the  Dubuque  and  Sioux 
City  for  a  minimum  annual  rental  of  $1500  per  mile,  which 
amount  just  covered  the  interest  charges  on  the  bonds  they  had 
agreed  to  turn  over  to  the  construction  company.37  The  Iowa 
Falls  line  had  no  equipment,  was  not  completed  and  passed 
through  a  thinly  settled  territory  from  which  the  traffic  would, 
necessarily,  remain  small  for  years.  While  there  is  no  direct 
evidence  to  show  that  fraud  existed,  the  inference  from  the 
reports  of  the  House  Committee  and  the  minutes  of  the  board 
of  directors  of  the  Dubuque  and  Sioux  City,  is  to  that  effect. 

Despite  the  apparent  unprofitableness  of  the  Iowa  Falls  and 
Sioux  City  lines  the  Illinois  Central  was  forced  to  include  them 
in  the  lease  in  order  to  obtain  the  profitable  Dubuque  and  Sioux 
City.  Since  control  of  these  lines  secured  a  large  and  profitable 
traffic  for  the  Illinois  lines  the  directors  of  the  Illinois  Central 
were  justified  in  making  the  arrangement.  It  was  a  good  busi- 
ness proposition  despite  the  peculiar  methods  pursued  in  leas- 
ing the  Iowa  Falls  to  the  Dubuque  and  Sioux  City. 

Aside  from  the  lease  of  the  Dubuque  and  Sioux  City  the 
only  important  action  taken  by  the  directors  of  the  company 
occurred  in  the  celebrated  Lake  Front  Case.38  With  the  devel- 
opment of  passenger  traffic  taking  place  in  the  sixties  the  Michi- 
gan Central,  Chicago,  Burlington  and  Quincy,  and  the  Illinois 
Central  found  their  Chicago  station  inadequate  and  a  new  build- 
ing became  necessary.  A  location  on  the  lake  front  was  especially 
fitted  to  the  business  of  the  three  roads  and,  accordingly,  they 
asked  the  legislature  for  the  right  to  fill  in  certain  parts  of  the 
submerged  land  along  the  lake  front.  The  legislature  was  finally 

36Report  of  Credit  Mobilier  and  Dubuque  and  Sioux  City  Railroad, 
House  Reports. 

"Official  statement  by  solicitor  of  Dubuque  and  Sioux  City  Rail- 
road in  Annual  Report,  1887.  Cites  proceedings  of  Board  of  Directors. 
As  this  monograph  deals  with  the  charter  lines  of  the  Illinois  Central, 
and  as  the  Dubuque  and  Sioux  City  was  not  leased  until  the  close  of 
the  period  under  discussion,  the  above  description  is  regarded  as  suffi- 
cient. 

38As  yet  the  author  has  not  been  able  to  find  sufficient  material  on 
this  subject  to  give  a  thorough  treatment. 


72  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [356 

induced  to  grant  their  request,  and  a  bill  giving  the  three  com- 
panies the  right  to  the  submerged  land  was  passed.  Governor 
Palmer  vetoed  it  in  a  vigorous  message  to  the  General  Assembly 
which  body,  however,  passed  it  over  his  veto.  "While  the  main 
features  of  the  bill  were  not  bad,  there  were  several  provisions 
which  worked  a  gross  injustice  upon  the  city  of  Chicago  and 
gave  excessive  rights  to  the  company.  The  common  council  of 
Chicago  refused  to  accept  the  provisions  of  the  bill,  public  opin- 
ion was  aroused  by  certain  parts  of  the  measure  and  by  the 
way  the  legislature  passed  it  over  the  governor's  veto,  and  the 
legislature  repealed  the  act.  The  case  was  carried  to  the  courts 
and  finally  decided  against  the  company.  The  act  was  com- 
monly known  as  the  Lake  Front  Steal,  and  by  its  connection 
with  the  matter  the  Illinois  Central  incurred  the  ill  will  of  the 
public. 

The  physical  development  of  the  Illinois  Central  railroad 
from  1856  to  1870  was  much  less  important  than  its  extensions 
through  traffic  agreements  or  leases.'  The  increased  traffic 
demanded  many  improvements  that  could  not  be  charged  to 
maintenance  of  way.  As  a  result,  large  expenditures  were  made 
both  from  capital  and  from  income,  and  the  condition  of  the 
property  in  1870  was  much  better  than  in  1857.  However,  there 
were  no  radical  changes.  Only  a  few  miles  of  steel  rails  were  in 
use  and  the  weight  of  rail  remained  the  same.  The  entire  line, 
except  from  Kensington  to  Chicago,  was  single  tracked,  and 
bridges,  culverts,  roadbed,  sidings,  ballast,  buildings,  and  ter- 
minals were  still  in  accordance  with  the  general  standards 
adopted  in  1851.39 

On  the  other  hand  the  development  of  the  equipment  was 
much  greater  than  the  improvement  of  roadbed  and  buildings. 
Forty  per  cent  of  all  the  money  charged  to  capital  from  1857  to 
1870  was  expended  on  new  equipment,  and  the  amount  of  roll- 
ing stock  was  over  twice  as  great  in  the  latter  year  as  in  the 
former.  There  was  also  a  marked  improvement  in  certain  kinds 
of  equipment,  especially  in  the  passenger  service.  Sleepers 
were  introduced  in  the  first  part  of  the  seventh  decade  and  by 
1870  they  were  in  common  use  on  all  night  trains  on  the  system. 
Air  brakes,  automatic  couplers,  vestibules,  improved  seats, 
heavier  cars  with  better  riding  qualities,  steel  springs,  more  ex- 
pensive furnishings,  these  were  the  important  advances  made 
during  the  period.  Many  of  these  improvements  would  have 

39Annual    Report,    Illinois    Central    Railroad,    1855-1870;    especially 
annual  reports  of  Maintenance  of  Way  Department;  cf.  Chap.  vi. 


357]  DEVELOPMENT,  1857-1870  73 

been  classed  as  curiosities  a  generation  later,  but  at  the  time 
they  were  considered  of  great  importance  and  so  they  were.  The 
greatest  change  in  locomotives  was  the  substitution  of  coal  for 
wood  as  fuel,  the  use  of  iron  or  steel  boiler  tubes,  somewhat 
heavier  engines,  and  the  development  of  distinct  freight  and  pas- 
senger types.  The  general  character  and  size  of  freight  cars 
remained  about  the  same,  although  a  few  cars  capable  of  carry- 
ing twenty  tons  were  in  use  and  the  old  four  wheel  cars  had 
been  sent  to  the  scrap  heap.40 

The  conditions  which  confronted  the  management  of  the 
Illinois  Central  from  1857  to  1870  were  peculiar.  Panics,  crop 
failures,  and  the  Civil  War  prevented  the  natural  development 
of  the  system  and  forced  it  into  policies  not  suited  to  its  geo- 
graphical location.  Moreover,  the  officers  of  the  company  were 
handicapped  by  its  foreign  control  and  often  adopted  more  con- 
servative methods  than  would  have  been  followed  under  a  dif- 
ferent system  of  ownership.  As  a  result,  the  company  could  not 
pursue  the  policy  adopted  by  some  of  the  more  aggressive  of  its 
competitors  and  often  lost  traffic  as  a  result.  Moreover,  many  of 
the  successes  obtained  by  the  Illinois  Central  from  1857  to  1870 
were  merely  temporary,  and  they  inflicted  loss  upon  the  com- 
pany later  on. 

40 'Annual  Report,  Illinois  Central  Railroad,  1857-1870;  Ringwalt,  De- 
velopment of  the  Railway  System  of  the  United  States,  various  chapters; 
American  Railway  Journal,  technical  articles  and  advertisements,  1857- 
1870. 


CHAPTER   V. 
TRAFFIC,  1857  TO  1870. 

In  1851  Illinois  was  practically  isolated  from  the  remainder 
of  the  country.  There  was  comparatively  little  trade  with  other 
portions  of  the  nation,  and  intercourse  even  between  local  com- 
munities was  of  slight  importance.  Moreover,  the  central  coun- 
ties, comprising  fully  one-half  of  the  arable  land  of  the  state, 
were  thinly  settled  and  the  people  living  there  raised  only  such 
crops  as  were  necessary  for  their  own  immediate  wants.  Even 
along  the  banks  of  the  rivers,  where  there  was  the  greatest 
opportunity  for  commerce,  the  industrial  and  agricultural  con- 
ditions were  more  backward  than  in  Ohio  or  western  New  York.1 
The  total  yield  of  wheat,  corn,  and  oats,  according  to  the  seventh 
census,  was  only  seventy-seven  million  bushels,  slightly  over 
one-sixth  the  crop  of  1879  and  but  little  more  than  the  amount 
raised  in  either  Indiana,  Ohio,  or  Pennsylvania.  Of  the  amount 
grown  less  than  one-tenth  was  shipped  to  markets  outside  the 
state.  Fully  two-thirds  of  such  shipments  were  sent  south  by 
way  of  the  Mississippi  Eiver,  while  less  than  one-third  went 
east  via  the  Great  Lakes.2  The  lower  Mississippi  valley  states, 
especially  Louisiana,  Mississippi  and  Alabama,  were  the  chief 
domestic  market  for  the  agricultural  products  of  Illinois.  The 
exports  to  Europe  from  the  central  West  were  also  handled  by 
way  of  New  Orleans.  Thus,  the  trade  of  Illinois,  as  well  as  that 
of  the  other  upper  Mississippi  valley  states,  was  along  north 
and  south  lines. 

Consequently,  from  the  traffic  standpoint,  the  construction 
of  the  Illinois  Central  railroad  involved  peculiar  problems. 
When  Senator  Douglas  secured  the  land  grant  of  1850,  it 
was  given  by  Congress  for  the  definite  object  of  building  a  rail- 
road from  the  Great  Lakes  and  the  upper  Mississippi  River  to 
the  Gulf  of  Mexico,  with  Chicago,  Dubuque,  and  Mobile,  the  re- 
spective termini.  The  Illinois  Central  was  only  a  part  of  a 
larger  project,  and  a  similar  grant  of  land  was  given  to  the 

!Cf.  Chap.  i. 

2Ibid.;  Report  of  the  Committee  of  English  and  Dutch  Stockholders,. 
1877. 

74 


359]  TRAFFIC,  1857-1870  75 

Mobile  and  Ohio  and  other  southern  railroads  to  complete  the 
line  from  Cairo  to  the  Gulf.3  This  all-rail  route  from  the  north 
to  the  south  was  intended  to  supplement  the  Mississippi  River 
and  to  provide  an  economical  trade  route  which  would  retain 
the  commerce  of  the  Mississippi  valley  in  existing  channels.4 

The  importance  of  this  north  and  south  railroad  was  clearly 
understood  by  the  promoters,  and  they  built  the  road  on  the 
most  direct  line  from  Chicago  and  Dubuque  to  Cairo.  The 
latter  city,  not  Chicago,  was  expected  to  be  the  main  terminus 
of  the  system,  although  not  necessarily  the  larger  city.5  So  far 
as  the  company  was  concerned  the  location  of  the  line  meant  that 
the  only  profitable  route  for  the  grain  of  central  Illinois,  espe- 
cially that  portion  along  the  main  line  from  Dixon  to  Vandalia, 
was  south  to  Cairo.  Otherwise,  the  road  would  get  only  a  short 
haul  to  some  junction  point.  From  Cairo,  it  was  thought,  the 
Mississippi  River,  and  the  Mobile  and  Ohio,  the  New  Orleans, 
Jackson  and  Great  Northern,  and  the  Mississippi  Central  rail- 
roads, with  connections,  would  form  the  southern  part  of  a 
through  route  from  the  Great  Lakes  and  the  upper  Mississippi 
to  Mobile  and  New  Orleans.6 

However,  in  the  sixth  and  seventh  decades  of  the  19th 
century,  the  old  trade  routes  between  the  west  and  the  other 
portions  of  the  United  States  were  radically  altered.  The  devel- 
opment of  steam  navigation  on  the  Great  Lakes,  the  construction 
of  a  vast  network  of  railroads,  the  industrial  expansion  of  west- 
ern Europe  and  of  the  north  Atlantic  seaboard,  and  the  Civil 

3Cf.  Chap.  n.  Section  7  of  the  Act  of  September  20,  1850,  states: 
"That  in  order  to  aid  in  the  continuation  of  said  Central  Railroad  from 
the  mouth  of  the  Ohio  river  to  the  city  of  Mobile,  all  the  rights,  privi- 
leges, and  liabilities shall  be  conferred  on  the  states  of  Ala- 
bama and  Mississippi." 

^Report  of  the  Delegates  Appointed  by  the  English  and  Dutch  Share- 
holders, 1877;  Annual  Report,  Illinois  Central  Railroad,  reports  of  the 
President  and  Directors,  1861-1875. 

6Ever  since  the  establishment  of  Cairo  the  capitalists  interested  in 
the  promotion  of  the  city  have  had  extremely  sanguine  ideas  as  to  the 
future  importance  of  the  place.  When  the  Illinois  Central  was  incor- 
porated Chicago  had  a  population  of  only  thirty  thousand,  and  frequent 
prophecies  were  made  that  Cairo  would  soon  be  the  metropolis  of  the  state. 
Sober  statements  were  made  that  the  city  would  have  a  population  of 
half  a  million  before  the  end  of  the  century. 

•Reports  of  Robert  Rantoul  and  David  Neal  in  Documents  Relating 
to  the  Organization  of  the  Illinois  Central  Railroad;  Annual  Report,  Illi- 
nois Central  Railroad,  1861-1874. 


76  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [360 

War,  with  the  resulting  prostration  of  the  South,  resulted  in  a 
readjustment  of  the  commerce  between  different  sections  of  the 
country.  Trade  was  forced  out  of  the  paths  it  had  followed 
prior  to  the  war  and  was  established  on  new  lines.  The  com- 
merce of  the  North  and  South  was  almost  destroyed  and  trade 
was  carried  on  along  lines  of  latitude,  not  longitude.7 

The  most  important  influence  which  brought  about  this 
change  was  the  industrial  expansion  of  the  north  Atlantic  states. 
By  1850  this  portion  of  the  country  had  become  largely  industrial 
in  character,  while  agriculture  was  relatively  of  much  less  im- 
portance than  a  generation  previous.  Then,  from  1850  on,  the 
rapid  settlement  of  the  west,  the  prosperity  of  the  southern 
states,  abundance  of  capital,  and  various  tariff  measures,  cul- 
minating in  the  highly  protective  Morrill  act  of  1861,  combined 
to  stimulate  this  movement.  As  early  as  the  close  of  the  fifth 
decade  these  states  liad  reached  practically  their  limit  of  agri- 
cultural production ;  in  other  words,  the  food  supplies  necessary 
for  their  rapidly  growing  population  could  no  longer  be  furnished 
by  the  farms  east  of  the  Alleghany  mountains.  This  condition 
was  made  more  prominent  by  the  large  immigration  of  the  period 
and  the  higher  standard  of  living  which  meant  larger  per  capita 
consumption  of  all  articles.  Thus,  there  was  an  enormous 
demand  for  food  stuffs  over  and  above  that  supplied  by  the 
agricultural  population  of  those  states,  and  even  in  1870  consider- 
ably over  one-third  of  the  total  grain  used  was  purchased  from 
the  west.8 

The  influence  of  the  Civil  War  in  changing  the  routes  by  which 
western  produce  was  sent  to  market  can  hardly  be  overestimated.  As 
stated  in  the  text,  the  commerce  of  the  upper  Mississippi  valley  was 
almost  entirely  with  the  southern  states.  In  the  publications  of  the  time, 
it  is  taken  for  granted  that  the  Mississippi  river  is  the  natural  outlet  of 
this  region.  At  the  present  time  we  are  so  accustomed  to  having  western 
produce  sent  east  by  way  of  the  Great  Lakes  that  the  southern  route  is 
the  unnatural  one.  Looking  at  the  matter  purely  from  the  standpoint 
of  natural  advantages  the  southern  route  is  by  all  odds  the  most  advan- 
tageous one.  As  shown  by  the  correspondence  between  Breese  and  Doug- 
las, it  was  clearly  the  purpose  of  Breese  and  Douglas  to  make  the  Illinois 
Central  a  north  and  south  line  which  would  develop  New  Orleans  or 
Mobile  in  preference  to  New  York. 

^Transportation  Routes  to  the  Seaboard,  p.  14;  Bogart,  Economic  His- 
tory of  the  United  States,  Chaps,  xi,  xu. 
CONSUMPTION  OF  WESTERN  GRAIN  IN  NORTH  ATLANTIC  STATES  :    1872. 

Shipments  of  western  grain  to  New  England  states 41,132,225  bus. 

Shipments  of  western  grain  to  Atlantic  states 63,744,897     " 

TOTAL  104,877,122    " 


361]  TRAFFIC,  1857-1870  77 

A  similarly  increasing  demand  occurred  in  Great  Britain, 
Holland,  and  other  countries  of  western  Europe.  English  and 
continental  industries  grew  very  rapidly  during  the  middle  of 
the  19th  century  and  this  movement  was  necessarily  accompanied 
by  a  steady  growth  in  population.  In  1846  the  Corn  Laws  of 
England  were  repealed,9  and  the  industrial  population  was  free 
to  purchase  wheat  and  corn  from  abroad.  The  bulk  of  this 
supply  came  from  the  United  States,  and  the  export  of  grain 
(including  flour  and  meal)  rose  from  thirteen  million  bushels  in 
1850  to  over  fifty  million  in  1870.10 

The  third  market  for  Illinois  products  was  the  southern 
Mississippi  valley.  The  cotton  states,  such  as  Mississippi, 
Alabama,  Louisiana  and  Georgia,  although  well  adapted  to  the 
raising  of  corn  and  oats,  found  it  more  profitable  to  devote  their 
energies  to  the  production  of  cotton  and  sugar,  and  to  purchase 
many  of  their  food  supplies  from  the  west.  The  high  price  of 
cotton  prior  to  the  Rebellion  made  it  especially  profitable  to 
pursue  this  policy,  and  in  the  three  or  four  years  immediately 
preceding  the  war  the  demands  for  western  corn  and  pork  were 
especially  heavy.  However,  the  Civil  War  destroyed  this  market 
and  diverted  the  grain  traffic  to  the  eastern  seaboard.  After 
1865  attempts  were  made  to  revive  this  trade,  but  the  enormous 
losses  of  the  southern  planters,  the  emancipation  of  the  slaves, 
the  lack  of  capital,  the  falling  price  of  cotton,  and  the  destruc- 

9In  1841  the  population  of  the  United  Kingdom  was  26,730,000;  in 
1871  this  was  31,484,000,  or  an  increase  of  4,754,000  million  in  the  thirty 
years.  During  the  same  time  the  agricultural  population  actually  de- 
creased. Gibbins,  Industry  in  England,  p.  446;  Levi,  History  of  British 
Commerce,  p.  297;  Seignobos,  Political  History  of  Europe  since  1814, 
P-  59- 

10Levi,  History  of  British  Commerce,  p.  297;  cf.  Tenth  Census  (1880), 
volume  on  Agriculture,  monograph  on  Cereal  Production  in  the  United 
States,  especially  p.  468. 

In  1870  the  United  Kingdom  consumed  14,100,000  quarters  of  wheat 
grown  on  English  farms,  and  imported  7,950,000  quarters,  or  63,600,000 
bushels.  The  exports  of  the  United  States  in  1870  were:  wheat,  36,584,- 
ooo  bushels;  flour,  3,463,000  barrels;  corn,  1,392,000  bushels;  corn  meal, 
187,000  barrels.  This  was  the  greatest  amount  exported  since  1863.  From 
1850  to  1870  the  continental  demand  for  American  grain  or  grain  products 
was  slight.  During  occasional  years  the  exports  were  sufficient  to  attract 
attention,  but  usually  they  were  not.  Until  the  Civil  War  the  West 
Indies  were  an  important  market  for  grain,  especially  grain  sent  south 
by  way  of  the  Mississippi  River.  The  competitors  of  the  United  States 
for  the  English  market  were  France,  Russia,  and  Turkey. 


78  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [362 

tion  or  diversion  of  the  transportation  facilities  made  it  difficult 
to  develop  the  old  commerce,  while  the  changed  economic  condi- 
tions forced  the  planters  to  raise  more  of  their  food  supplies  than 
before.  Therefore,  in  1870,  the  southern  market  for  Illinois  and 
Iowa  grain  was  almost  negligible.11  Moreover,  the  same  influences 
which  affected  the  domestic  market  ruined  the  exportation  of 
western  products  via  New  Orleans.  Prior  to  1850  the  southern 
port  was  as  important  a  grain  center  as  New  York,  but  various 
causes,  some  of  them  originating  before  the  war,  reduced  the 
amount  of  grain  exported  to  an  insignificant  figure,  and  in  the 
fifteen  years  from  1856  to  1870  the  total  shipments  of  corn,  flour, 
and  wheat  from  New  Orleans  were  less  than  fifteen  million 
bushels,  as  against  three  hundred  million  bushels  from  New 
York  City. 

The  industrial  development  of  the  country  and  the  growth 
of  a  non-agricultural  population  were  not  confined  to  the  eastern 
states.  The  northwestern  and  upper  Mississippi  valley  states 
grew  very  rapidly  in  population  from  1850  to  1870,  and  this 
growth  was  especially  noticeable  in  the  towns  and  cities.  Cleve- 
land, Indianapolis,  Toledo,  Chicago,  Milwaukee,  Detroit,  and 
St.  Louis  became  large  cities,  while  the  general  urban  population 
grew  much  faster  than  the  agricultural  population.  This  large 
increase  of  an  element  which  did  not  produce  its  own  food  sup- 
plies made  necessary  a  correspondingly  larger  production  of 
grain  and  meat  by  the  agricultural  districts. 

Thus,  the  combined  demands  of  Europe,  of  the  north 
Atlantic  states,  and  of  the  urban  population  of  the  central  west 
necessitated  a  large  increase  in  the  grain  production  of  the 
country.12  This  demand  could  be  met  in  only  two  ways :  either 
a  highly  intensive  system  of  cultivation  must  be  adopted  in  such 
states  as  New  York,  Pennsylvania,  Ohio,  and  Indiana,  or  else  the 
uncultivated  prairies  of  Michigan,  Illinois,  Wisconsin,  Missouri, 
and  Iowa  would  have  to  be  utilized.  To  depend  upon  highly 
intensive  farming  was  uneconomical  at  that  time  and  the  natural 
alternative  was  the  utilization  of  the  western  lands.  Of  this 

"Olmsted,  The  Lower  South,  A  Journey  Through  the  Back  Country; 
Helper,  The  Impending  Crisis,  especially  Chap.  I,  pp.  9,  10;  Annual  Re- 
port, Illinois  Central  Railroad,  1857-1861;  Eighth  Census  (1860),  volume 
on  Agriculture,  Introduction ;  Report  of  the  Delegates  Appointed  by  the 
English  and  Dutch  Shareholders,  1877 ;  Bogart,  Economic  History  of  the 
United  States,  Chap,  xx,  p.  273. 

"The  following  table  shows  the  concentration  of  grain  production  in 


363]  TRAFFIC,  1857-1870  79 

territory  the  most  available  part,  as  well  as  the  richest  in  poten- 
tial agricultural  resources,  was  the  corn  belt  of  Illinois  and 
Iowa,  particularly  the  region  traversed  by  the  charter  lines  of 
the  Illinois  Central  Railroad.  Because  of  these  advantages,  this 
section,  during  the  period  from  1850  to  1870,  developed  into  the 
most  important  single  source  of  grain  production  in  the  United 
States  and  the  center  of  supply  for  both  the  eastern  states  and 
for  Europe.13 

However,  as  explained  in  Chapter  I,  it  was  this  very  part  of 
Illinois,  possessing  as  it  did  the  greatest  opportunities  for 
exploitation,  that  was  the  largest  area  unprovided  with  adequate 
transportation.  Accordingly,  in  1850  there  was  a  pressing  need 
on  the  part  of  the  grain  consuming  territory  in  the  east  and 
south,  as  well  as  on  the  part  of  the  grain  growing  territory  of 
central  Illinois,  for  a  system  of  transportation  that  would  open 
up  to  development  these  slightly  touched  resources.  The  means 
for  the  accomplishment  of  this  result  was  an  adequate  system  of 
transportation,  both  local  and  external,  for  the  interior  of  the 
state  the  construction  of  railroads  such  as  the  Illinois  Central; 
for  the  country  as  a  whole,  the  improvement  of  the  existing 
natural  waterways  and  the  construction  of  new  railroads,  or 

the  central  western  states.  The  statistics  in  the  table  are  obtained  from 
the  United  States  Census,  volumes  on  Agriculture. 

INCREASE  IN  PRODUCTION  OF  CORN,  WHEAT,  AND  OATS,  1850-1870. 

1850  1870  INCREASE        PER  CENT 

Group       1 151,408,000          190,097,000  38,689,000  25.6 

Group      II 151,870,000         208,161,000  56,291,000  35.4 

Group    III 156,450,000          521,255,000         364,805,000  232.7 

Group    IV 47,000  57,799,000  57,752,000 

Group      V 376,069,000          304,762,000  61,307,000  16.3 


United   States 624,600,000       1,408,044,000          784,044,000  125.4 

Group  I  Connecticut,  Delaware,  Massachusetts,  New  Jersey,  New 
York,  Rhode  Island,  Maine,  New  Hampshire,  Vermont. 

Group    II    Ohio,  Indiana. 

Group  III    Illinois,  Iowa,  Michigan,  Missouri,  Wisconsin. 

Group  IV    Kansas,  Minnesota. 

Group  V  Alabama,  Arkansas,  Georgia,  Kentucky,  Louisiana,  Mis- 
sissippi, Tennessee. 

18Cf.  tables  I  to  V.  The  20  counties  directly  tributary  to  the  I.  C. 
R.  R.  produced  in  1870  four  per  cent  of  all  the  grain  produced  in  the 
country  and  nearly  eleven  per  cent  of  that  produced  in  Illinois,  Iowa, 
Michigan,  Missouri,  and  Wisconsin.  The  proportion  of  corn  and  oats 
was  considerably  larger. 


80  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [364 

extension  of  old  ones,  from  Illinois  to  the  Gulf  of  Mexico  and  to 
the  Atlantic  seaboard. 

From  an  examination  of  the  map  one  perceives  that  Illinois 
is  located  between  the  two  great  natural  highways  of  North 
America — the  Great  Lakes — St.  Lawrence  River  (Erie  Canal 
after  1825)  route  to  the  north  and  east,  and  the  Mississippi 
River  route  to  the  south.  Because  of  these  natural  connections 
there  was  a  small  movement  of  grain  outward  from  Illinois 
prior  to  1850,  but,  in  the  absence  of  railroads  connecting  the 
interior  counties  with  either  of  these  two  routes,  the  amount 
shipped  did  not  satisfy  the  growing  needs  of  the  country.  More- 
over, the  efficiency  of  water  transportation,  as  then  existing, 
was  not  such  as  to  permit  an  economical  movement  of  grain, 
even  when  brought  to  the  terminals  of  the  waterways.  Accord- 
ingly, the  development  of  central  Illinois  was  dependent,  in  the 
first  place,  upon  the  construction  of  the  Illinois  Central  Rail- 
road, or  another  railroad  answering  the  same  purpose;  and,  in 
the  second  place,  upon  the  improvement  of  the  waterways  and 
railroads  mentioned  in  the  previous  paragraph.  Moreover,  as 
is  likewise  evident  from  an  examination  of  the  map,  Illinois  is 
a  watershed  for  both  of  these  great  waterways,  so  that,  by  only 
a  short  land  haul,  traffic  can  be  diverted  to  one  or  the  other  of 
these  routes.  Consequently,  the  state  can  supply  either  or  both 
of  the  great  domestic  markets  for  food  stuffs:  the  lower  south 
by  way  of  the  Mississippi  River,  and  the  eastern  states  by  way 
of  the  Great  Lakes.  Furthermore,  in  these  two  routes  and  the 
ports  of  New  Orleans  and  New  York,  it  possesses  alternative 
trade  routes  to  the  main  European  markets.14 

wFrom  the  standpoint  of  geology,  geography,  history,  politics,  and 
industry  Illinois  is  the  connecting  link  between  the  eastern,  the  southern, 
the  northern,  and  the  western  parts  of  North  America  east  of  the  Rocky 
Mountains.  By  geological  formation  and  geographical  location  central 
Illinois,  as  noted  in  the  text,  forms  a  plain  tributary  to  both  Lake  Michi- 
gan and  the  Mississippi  River.  Southern  Illinois  was  settled  mainly  from 
the  southern  slave  states,  while  northern  Illinois  was  settled  by  immigrants 
from  northern  Europe,  New  England,  and  New  York.  Politically,  the 
state  has  had  active  and,  at  times,  a  leading  place  in  the  affairs  of  the 
parties :  Whig,  Democrat,  Republican,  Populist,  Progressive,  and  Socialist. 
In  industry  it  is  not  only  the  most  important  agricultural  state,  but,  as  is 
seen  in  the  great  industrial  developments  around  Chicago,  E.  St.  Louis, 
and  in  southern  Illinois,  it  is  the  natural  center  of  industrial  production 
for  the  central  west.  (St.  Louis,  Gary,  etc.,  although  just  outside  the 
borders  of  the  state  are,  in  reality,  an  integral  part  of  the  greater  com- 


365]  TRAFFIC,  1857-1870  81 

This  naturally  advantageous  position  of  Illinois  was  im- 
proved and  strengthened  by    the  construction    of    the    Illinois 
Central  Railroad  during  the  years  1851  to  1857,  as  told  in  detail 
in  Chapters  III  and  IV.     The  main    line    and    the    Dubuque 
branch  extended  in  the  form  of  a  great  bow  from  the  upper 
waters  of  the  Mississippi,  at  Dubuque,  to  its  junction  with  the 
Ohio  Eiver,  at  Cairo.    The  Chicago  branch  extended  from  Lake 
Michigan,  at  Chicago,  directly  south  to  Centralia  on  the  main 
line  and  from  there  to  Cairo,  thus  connecting  the  Great  Lakes 
and  the  Mississippi  Eiver  at  its  junction  with  the  Ohio  River. 
Moreover,  by  the  leases,  trackage  agreements,  and  traffic  alli- 
ances mentioned  in  Chapter  IV,  the  company  gradually  estab- 
lished connections  from  the  Great  Lakes,  at  Chicago,  directly 
west  across  the  state  to  the  upper  Mississippi  RiVer,  at  Dubuque, 
and  the  Missouri  River,  at  Sioux  City;  from  the  Great  Lakes, 
southwest  across  the  state,  to  the  Mississippi  River,  at  St.  Louis, 
just  below  its  junction  with  the  Missouri  River;  and  between 
the  two  main  terminals  of  the  central  Mississippi,  i.e.  Cairo  and 
St.  Louis.15     This  strategic  location  of  the  railroad  gave  it  two 
important  advantages  that  have  proven  of  vital  importance  in 
later  years:  first,  the  Illinois  Central  system  constituted  the 
best,  and  at  first  the  only  means  by  which  the  farmers  of  the 
greater  part  of  Illinois  could  reach  Chicago  and  St.  Louis,  the 
two  main  grain  and  live  stock  markets  of  the  West;  second,  the 
fact  that  the  system  was  tributary  to  both  of  the  main  natural 
highways   of  ^the  continent   permitted  the   railroad,   acting  as 
agent  for  its  territory,  to  route  traffic  either  to  the  south  or  to 
the  east  as  proved  more  advantageous,  or  to  Europe  via  either 
of  the  two  gateways. 

Of  no  less  importance  than  the  actual  construction  of  the 

monwealth.)  These  facts,  though  only  slightly  understood  at  the  time, 
played  an  important  part  in  the  early  history  of  the  Illinois  Central  and 
have  influenced  in  a  dominant  way  its  traffic  development. 

16Cf.  Chap,  iv;  viz.  (i)  Chicago — (a)  Galena  &  Chicago  Union  R.  R., 
or  (b)  Chicago,  Burlington  &  Quincy  R.  R.,  or  (c)  Peoria  &  Oquaka 
R.  R.  to  main  line  of  I.  C.  R.  R.  at  Freeport,  Mendota,  and  El  Paso, 
respectively;  I.  C.  R.  R.  to  Dubuque;  Dubuque  &  Sioux  City  R.  R.  (west- 
ern lines)  to  Sioux  City.  (2)  Chicago — Chicago  Branch  to  (a)  Sando- 
val:  Mississippi  &  Ohio  R.  R.  (now  B.  &  O.  S.  W.)  to  St.  Louis,  or 
(b)  Pana :  St.  Louis,  Alton  &  Terre  Haute  R.  R.  (now  C.  C.  C.  &  St.  L. 
R.  R.)  to  St.  Louis.  (3)  Cairo— main  line  to  Odin;  M.  &  O.  R.  R.  to  St. 
Louis,  or,  about  1868,  main  line  to  Du  Quoin ;  St.  L.  A.  &  T.  H.  R.  R. 
(now  Cairo  Short  Line  stem  of  I.  C.  R.  R.)  to  St.  Louis. 


82  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [366 

railroad  was  the  cost  of  transportation,  both  from  the  farm  to 
Chicago,  Cairo,  or  St.  Louis,  and  from  these  terminals  to  the 
ultimate  destination  in  the  South,  the  East,  or  Europe.  If  the 
company  and  the  territory  tributary  to  it  were  to  prosper  it 
was  necessary,  not  only  that  the  rates  from  the  farm  to  the 
final  market  be  less  than  before  the  construction  of  the  railroad, 
but  also  that  they  be  low  enough  to  allow  Illinois  grain  to  travel 
eastward  or  southward  in  competition  with  grain  from  such 
states  as  New  York,  Pennsylvania,  Ohio,  Indiana,  Kentucky, 
or  Tennessee,  which  were  much  nearer  the  consumer.  Thus,  the 
traffic  development  of  the  Illinois  Central  Railroad  and  of  its 
territory  was  determined  by  two  factors,  both  of  them  largely 
beyond  the  control  of  the  management:  first  and  essential,  such 
an  improvement  in  the  efficiency  of  railroad  and  water  trans- 
portation that  the  cost  of  carrying  grain  from  the  farm  to  the 
final  market,  plus  the  cost  of  raising  the  grain  in  Illinois,  would 
be  less  than  the  cost  of  producing  and  shipping  it  from  the  farms 
which  supplied  the  demand  in  1850;  second,  and  incidental, 
such  an  improvement  in  transportation  having  been  effected, 
the  determination  of  the  question  whether  the  best  market 
would  be  the  existing  one  in  the  South  or  the  newly  developing 
one  in  the  East.  In  short,  therefore,  the  traffic  history  of  the 
Illinois  Central  Railroad  from  1857  to  1870,  as  discussed  in  the 
following  pages,  is  the  story  of  the  adaptation  of  the  railroad 
to  the  absolute  and  relative  developments  of  the  east  and  west 
trade  route  via  Chicago  and  of  the  north  and  south  route  via 
Cairo. 

Of  these  two  routes,  the  one  from  Chicago  east  gained  the 
most  from  improvements  in  transportation  facilities  taking  place 
between  1850  and  1870.  The  water  route,  via  the  Great  Lakes, 
the  Erie  Canal,  and  the  Hudson  River,  had  provided  reasonably 
cheap  rates  for  through  traffic  ever  since  1825,  but  in  the  decades 
before  and  after  the  Civil  War,  improvements  were  made  which 
reduced  the  charges  to  a  basis  much  lower  than  what  existed 
in  the  thirties  and  forties.  Larger  and  faster  lake  vessels  were 
put  in  service,  steam  generally  supplanted  sails,  and  various 
economies  of  operation  were  made,  the  result  of  which  greatly 
decreased  the  actual  cost  of  making  a  trip  from  Chicago  to 
Buffalo.16  In  1862  the  deepening  of  the  Erie  Canal  was  finished 
and  it  became  possible  for  canal  boats  of  250  tons  to  go  from 

18Ringwalt,  Development  of  Transportation  Systems  in  the  United 
States,  p.  135;  Tenth  Census  (1880),  volume  on  Agriculture,  monograph 
on  Cereal  Production. 


367]  TRAFFIC,  1857-1870  83 

Buffalo  to  New  York  City,  thus  reducing  the  cost  of  carriage  per 
ton.17  At  the  same  time,  the  important  harbors  on  the  Great 
Lakes  were  dredged  and  the  canals  at  Detroit,  Sault  Ste.  Marie, 
and  Niagara  Falls  were  enlarged  to  accommodate  large  lake 
vessels.18  Moreover,  the  reduced  cost  of  carriage  was  accom- 
panied by  even  more  important  improvements  in  the  handling 
of  freight  at  Chicago,  Buffalo,  and  other  terminals,  especially 
through  the  erection  of  elevators,  the  introduction  of  steam 
shovels,  power  conveyors  and  other  labor  saving  machinery,  and 
the  better  arrangement  of  the  docks.19  The  natural  result  of 
these  various  devices  to  cheapen  cost  of  transportation  was  a 
large  expansion  of  the  lake  and  canal  trade,  which,  in  turn, 
permitted  further  economies  and  allowed  still  more  extensive 
reductions  in  rates. 

Quite  as  important  as  the  improvement  of  water  transporta- 
tion was  the  development  of  all-rail  connections  between  Chicago 
and  New  York,  Boston,  Philadelphia,  and  Baltimore.  In  1853 
the  Lake  Shore  and  Michigan  Southern  was  finished  from  Buf- 
falo to  Chicago;  in  1854  Cornelius  Vanderbilt  consolidated  sev- 
eral disjointed  lines  into  the  New  York  Central  and  Hudson 
River  Railroad;  in  1855  the  Erie  was  built  to  Buffalo;  in  1856 
the  Baltimore  and  Ohio,  and  Ohio  and  Mississippi  route  was 
completed ;  and  in  1857  the  Pennsylvania  Central,  and  Pittsburg, 
Fort  Wayne,  and  Chicago  line  was  extended  to  Chicago.  Other 
railroads  were  completed  from  Buffalo  to  the  seaboard,  so  that 
in  1870  there  were  a  number  of  strong,  competitive  lines  from 
Lake  Michigan  to  the  Atlantic. 

At  first  the  all-rail  lines  were  unable  t6  compete  with  the 
water  route  for  the  low  grade  freight,  but  between  1860  and 
1870  further  consolidations  among  the  railroads,  and  extensive 
reductions  in  cost  of  operation  enabled  the  New  York  Central 
and  Pennsylvania  to  obtain  a  large  share  of  the  east  and  west 
traffic.  Fierce  competition  between  the  two  rival  lines  caused 
temporary  reductions  in  rates,  but  more  permanent  influences, 
such  as  consolidation  of  competing  and  connecting  lines,  reduc- 
tion of  curves  and  grades,  technical  improvements  in  motor 
power,  equipment,  and  roadbed,  better  methods  of  organization, 
accounting  and  operation,  largely  increased  traffic,  and  the  adop- 

1TRingwalt,  Development  of  Transportation  Systems  in  the  United 
States,  p.  135;  Tenth  Census  (1880),  volume  on  Agriculture,  monograph 
on  Cereal  Production. 


84  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [368 

tion  of  fast  freight  lines,  enabled  the  railroads  to  carry  most  of 
the  flour  and  much  of  the  wheat  and  other  grain  in  competition 
with  the  lake  and  canal  boats.20 

The  extensive  improvements  in  both  rail  and  water  trans- 
portation during  the  sixth  and  seventh  decades,  of  the  19th  cen- 
tury had  a  direct  influence  on  rates.  Not  only  were  there  rad- 
ical reductions  of  a  temporary  nature,  caused  by  rate  wars  and 
tariff  controversies,  but  reductions  in  cost  of  operation  allowed 
permanent  decreases  hardly  less  important.  As  most  of  the 
grain  traffic  from  1850  to  1868  or  1869  was  handled  by  the  lake 
vessels  the  changes  in  lake  rates  were  of  primary  importance. 
In  the  twelve  years  from  1858  to  1870  the  average  lake  rates 
from  Chicago  to  Buffalo  decreased  as  follows  :20* 

CORN  WHEAT 

1858  I2.7C  per  bu.  i5-5oc  per  bu. 

1870  6.0      "      "  6.77      "      " 


DECREASE         6.7      "      "  8.73      "      " 

This  reduction  in  lake  rates  was  accompanied  by  similar  reduc- 
tions in  freight  charges  on  the  Erie  Canal  and  in  1870  the  aver- 
age rate  per  ton  on  down  freight  was  $3.06  as  against  $4.81  in 
1854,  or  a  reduction  from  14.4c  per  bushel  to  9.2c.21  The  through 
rate  on  wheat  from  Chicago  to  New  York  City,  including  all 
tolls,  declined  from  28.36c  per  bushel  in  1864  to  20.24c  in  1871 
(ll.llc  in  1870),  with  rates  on  corn  from  Ic  to  3c  lower  per 
bushel.22  As  the  price  of  corn,  oats  and  wheat  were  over  fifty 
per  cent  higher  in  1870  than  in  1855,  the  decline  in  nominal 
rates  meant  a  much  greater  decline  in  absolute  charges.  Thus, 
in  1858  one  bushel  of  wheat  at  Chicago  paid  for  the  transporta- 
tion of  two  bushels  to  New  York,  while  in  1871  it  provided  for 
the  carriage  of  6.1  bushels.23 

Although  at  first  unimportant,  all-rail  shipments  of  grain 
from  the  west  to  the  east  had  become  common  by  1860  and  by 
1870  were  fully  as  frequent  as  all- water  shipments.  The  econo- 
mies mentioned  above  permitted  even  more  radical  reductions 
in  rates  by  railroads  than  took  place  on  the  lake.  In  1850  the 

20Johnson,  American  Railway  Transportation,  pp.  25-27;  Ringwalt, 
Transportation  Systems  in  the  United  States,  pp.  140-209. 

20*Annual  Report,  Chicago  Board  of  Trade,  1905,  p.  108. 

^Transportation  Routes  to  the  Seaboard,  in  Sen.  Rep.,  43  Cong.,  I 
sess.,  Appendix,  p.  168. 

"Annual  Report,  Chicago  Board  of  Trade,  1905,  p.  108. 

"Aldrich  Report,  II,  pp.  7,  8,  60,  61. 


369]  TRAFFIC,  1857-1870  85 

usual  charge  for  grain  traffic  was  4c  per  ton  per  mile,  or  occa- 
sionally 3c,  irrespective  of  distance.24  By  1870  the  New  York 
Central  had  reduced  the  general  average  rate  per  ton  per  mile 
to  1.9  cents,  as  against  2.5c  in  the  earlier  year,  1856.  On  the 
Erie  there  was  a  further  reduction  from  2.5c  in  the  earlier  period 
to  1.4c  in  the  later.25  Moreover,  during  the  summer  months 
wheat  was  carried  by  rail  from  Chicago  to  New  York  for  27c  a 
bushel,  or  93c  per  ton  per  mile.26  At  times,  on  account  of  rate 
wars,  the  tariff  charges  were  reduced  to  an  even  lower  figure 
per  ton  per  mile.  However,  the  average  rates  for  all-rail  ship- 
ments from  Lake  Michigan  to  the  Atlantic  seaboard  declined 
from  36.19c  per  bushel  in  1858  to  28c  in  1870  for  corn,  and  from 
38.61c  to  30c  for  wheat.27  Moreover,  the  railroads  from  Buffalo 
to  New  York,  especially  the  New  York  Central  and  Erie,  made 
special  efforts  to  handle  grain  between  these  points  in  competi- 
tion with  the  Erie  Canal.  As  a  result  the  average  rail  rate  in 
1871  was  18.3c  for  wheat  and  17.0c  for  corn,  as  against  13.1c 
and  11.3c  respectively  on  the  canal.  The  average  lake  and  rail 
rate,  i.e.  via  lake  to  Buffalo  and  from  there  to  New  York  by  rail, 
was  22. 2c  per  bushel  on  corn  and  22. 5c  on  wheat.28 

Conditions  existing  in  the  east  and  west  traffic  did  not  hold 
good  for  shipments  from  Chicago  south.  The  actual  cost  of 
handling  freight  from  Cairo  or  St.  Louis  to  New  Orleans  had 
not  materially  decreased  from  1850  to  1870,  and,  as  a  result, 
rates  between  those  points  declined  much  more  slowly  than  the 
rates  on  east  and  west  lines  of  transportation,  so  that  in  the 
latter  year  charges  from  central  Illinois  to  the  Gulf  were  only 
slightly  less  than  the  lake  and  canal  tariffs  to  New  York.  The 
barge  rates  from  St.  Louis  were  exceedingly  low,  but  the  gen- 
eral introduction  of  this  system  of  carriage  did  not  take  place 
much  before  1870  and,  consequently,  exerted  only  a  slight  influ- 
ence on  rates  from  1850  to  1870.29  The  steamboat  charges  were 
nearly  twice  those  made  by  the  barge  lines,  but  quicker  time  and 
less  danger  to  the  freight  compensated  the  shipper  for  the  dif- 
ference.30 Considering  merely  the  tariff  rates,  there  was  a 

^Transportation  Routes  to  the  Seaboard,  p.  61. 
25Ibid.,  p.  61. 
™Ibid.,  p.  52. 

"Annual  Report,  Chicago  Board  of  Trade,  1905,  p.  108. 
2SIbid. 

^Transportation  Routes  to  the  Seaboard,  I,  24,  52;  ibid.,  Appendix,  pp. 
19,  20,  53,  96,  167,  168;  ibid.,  II,  897-900. 
30Ibid. 


86  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [370 

difference  of  about  V2C  Per  hundred  on  fourth  class  shipments 
and  from  lOc  to  12c  per  bushel  on  grain  from  central  Illinois  to 
market  in  favor  of  New  Orleans.31  However,  service  and  other 
conditions  reversed  this  advantage.  (1)  The  lowest  north  and 
south  rates  were  for  shipment  in  bulk  by  barges  and  this  service 
was  not  in  general  use  before  1866.  Moreover,  most  of  the  lines 
stopped  at  St.  Louis,  not  Cairo,  and  the  Illinois  Central  received 
no  advantage  in  sending  grain  to  St.  Louis  in  preference  to 
Chicago,  as  the  rates  from  central  Illinois  to  the  two  cities  were 
practically  the  same.  (2)  Shipments  of  grain  by  steamboat 
from  Cairo  south  had  to  be  sacked  and  the  cost  of  sacking  aver- 
aged several  cents  per  bushel.  (3)  On  account  of  the  longer 
route  and  the  semi-tropical  climate,  loss  from  shrinkage  via  the 
north  and  south  route  was  much  greater  than  via  the  east  and 
west  one.  This  loss  would  run  from  ten  to  twenty  per  cent  of 
the  weight  of  corn  shipments.  (4)  Terminal,  storage,  and  trans- 
fer facilities  were  much  poorer  at  New  Orleans  than  at  New 
York.  (5)  The  local  southern  demand  for  grain  was  small,  and 
Kentucky,  Tennessee  and  Missouri  were  in  a  better  position  than 
Illinois  to  compete  for  the  traffic. 

Moreover,  through  export  traffic  was  practically  prevented 
by  the  higher  steamer  rates  from  New  Orleans  to  Liverpool  than 
from  New  York  to  Liverpool.  In  1870  there  were  no  quotations 
for  the  transportation  of  corn  via  steamer  from  New  Orleans  to 
Liverpool  and  in  only  five  months  were  there  any  quotations 
for  shipment  by  sailing  vessels.  In  1872,  the  only  year  for  which 
there  is  a  good  basis  for  comparison,  the  difference  was  as  fol- 
lows:—  (quotations  in  pence  per  bushel,  corn) 

STEAM  SAIL 

New  York  to  Liverpool 7^d  6u/i*d 

New   Orleans   to   Liverpool n/4d  io^d 

Difference  in  favor  of  New  York        4d(8c)  4d(8c)32 

This  difference  of  nearly  eight  cents  per  bushel  in  favor  of  New 
York  offset  most  of  the  advantages  received  by  New  Orleans 
from  lower  domestic  rates.  Higher  insurance,  higher  elevator 
and  wharfage  charges,  longer  time  en  route,  with  increased 
interest  on  the  shipment,  eliminated  the  remaining  advantages 
New  Orleans  possessed  over  New  York  and  placed  the  two  ports 

^Transportation  Routes  to  the  Seaboard,  I,  24,  52;  ibid.,  Appendix, 
pp.  19,  20,  53,  96,  167,  168 ;  ibid.,  II,  897-900. 

32Ibid.,  Appendix,  pp.  20,  54.  It  should  be  noted  that  the  comparison 
of  rates  is  based  on  a  single  year  and  is  liable  to  error,  but  it  was  the 
best  that  could  be  secured. 


371]  TRAFFIC,  1857-1870  87 

on  an  equality  so  far  as  transportation  charges  were  concerned. 
But  even  had  equal  rates  existed  the  disadvantages  of  the  south- 
ern route  were  too  great  to  permit  any  important  export  of 
grain  by  way  of  New  Orleans  or  Mobile.33 

The  second  important  item  affecting  the  movement  of  grain 
from  Illinois  to  the  East  was  the  local  transportation  charge, 
that  is,  the  rate  from  the  local  station  to  Chicago  or  Cairo.  In 
Chapter  I  it  was  shown  that  the  cost  of  handling  grain  over 
Illinois  roads  was  so  high  that  territory  more  than  ten  to  fifteen 
miles  from  railroad  or  river  transportation  could  not  send  its 
produce  to  outside  markets,  and  that  the  Illinois  Central  Rail- 
road was  necessary  to  remedy  this  trouble.  On  the  macadam- 
ized turnpikes  of  the  eastern  states  the  cost  of  carrying  grain 
by  wagon  was  about  ten  cents  per  ton  per  mile,  but  over  the 
Illinois  roads  this  cost  must  have  been  increased  fifty  to  one 
hundred  per  cent.34  With  the  completion  of  the  railroad  this 
charge  was  reduced  materially.  Moreover,  there  was  a  slight 
reduction  in  rates  from  1856  to  1870,  primarily  in  bulky  articles 
such  as  grain,  lumber,  coal,  and  salt.  The  higher  class  goods 
had  practically  the  same  rates  in  1870  as  in  1856,  although  some 
difference  must  be  made  for  inflation  of  the  currency.  As  early 
as  1856  a  rate  of  1.75c  per  ton  per  mile  was  made  on  coal35  and 
in  the  next  fourteen  years  this  charge  was  reduced  to  less  than 
lc.36  Grain  from  local  stations  was  carried  to  Cairo  in  1858 
for  2.2c  per  ton  per  mile  and  for  about  1.5c  in  1870.  On 
through  grain  shipments  to  New  Orleans  the  Illinois  Central 
received  a  rate  of  1.3c  per  ton  per  mile  in  1870.37  A  somewhat 

^Transportation  Rdutes  to  the  Seaboard,  Appendix,  pp.  20,  54. 
Prior  to  1861  a  few  stretches  of  railroad  were  constructed  parallel 
to  the  Mississippi  River,  (mainly,  what  is  now  the  Mobile  &  Ohio 
R.  R.,  built  under  the  Land  Grant  Act  of  1850,  the  Mississippi  Central 
R.  R.  and  the  New  Orleans,  Jackson  &  Great  Northern  R.  R.,  now  the 
southern  lines  of  the  I.  C.  R.  R.)  and,  though  incomplete,  they  were  just 
beginning  to  form  a  southern  connection  for  the  Illinois  Central  Rail- 
road when  the  Civil  War  paralyzed  all  communication  with  the  South. 
Following  the  war  efforts  were  made  to  rehabilitate  and  complete  these 
southern  lines,  but  with  little  success  until  after  1870.  Accordingly,  dur- 
ing the  period  covered  in  this  monograph,  railroad  communication  be- 
tween Illinois  and  the  Gulf  of  Mexico  was  almost  non  existent. 

34Ringwalt,  Transportation  Systems  in  the  United  States. 

35J.  W.  Foster,  Mineral  Resources  of  the  Illinois  Central  Railroad, 
p.  ro. 

36Annual  Report,  Illinois  Central  Railroad,  1870. 

37Cairo  Times,  February  17,  1858;  cf.  pp.  115-117;  also,  Transporta- 
tion Routes  to  the  Seaboard,  II,  897-900. 


88  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [372 

better  basis  of  comparison  is  the  average  rate  on  different  classes 
of  traffic.  The  per  ton  per  mile  rates  on  local  and  through 
traffic  in  1859  and  1870  were  as  follows: — 

1859  1870 

Local   freight  north 2.190  2.440  per  ton  per  mile. 

Local  freight  south 2.06  2.35      "      "      "       " 

Through   "       north 1.70  1.12      "      "      "       " 

south 1.86  1.55      "      "      " 

"       n.&s 1.80  1.36      "      "      "       " 

All  "       n.&s 2.14  2.31       "      "      "       "38 

Nearly  all  of  the  local  traffic  moving  south  consisted  of  lumber, 
coal,  and  a  little  grain;  three-fourths  of  the  local  traffic  north 
was  grain,  so  that  the  rates  on  north  and  south  local  traffic  give 
an  approximate  idea  of  the  rates  charged  for  lumber,  coal,  and 
grain.  However,  the  true  standard  by  which  local  rates  must 
be  judged,  is  whether  they  permitted  grain  from  central  Illinois 
to  be  carried  east  or  south,  in  competition  with  grain  from  other 
parts  of  the  state,  and  from  Missouri,  Wisconsin,  Michigan,  and 
Indiana. ,  Up  to  about  1868  the  farmer  along  the  Illinois  Cen- 
tral competed  on  favorable  terms  with  the  farmers  of  the  states 
farther  east  and  south,  but  this  was  due  to  the  high  price  of 
wheat  and  corn  and  the  richness  of  the  soil,  rather  than  to 
favorable  railway  rates.39 

Reduced  local  and  through  rates  on  agricultural  products 
made  it  possible  for  farmers  to  take  up  the  millions  of  acres 
of  vacant  land  in  the  northwestern  and  upper  Mississippi  valley 
states  and  produce  grain  for  eastern  and  European  markets. 
As  a  result,  the  two  decades  from  1850  to  1870  witnessed  an 
unprecedented  immigration  into  Illinois,  Michigan,  Wisconsin, 
Missouri,  Minnesota,  and  Kansas,  and  by  1870  the  population  of 
this  territory  was  nearly  four  times  what  it  was  in  1850.40  This 
is  shown  in  the  following  table : 

I. 

SETTLEMENT  OF  THE  CENTRAL  WEST.  PER 

GROUP  1850  1870         INCREASE     CENT 

Illinois  &  Iowa 1,043,000      3,733,ooo      2,710,000      259 

Mich.,  Wis.  &  Mo 1,384,000      3,959,000      2,575,000      186 

Minn.  &  Kansas 6,000         803,000 


TOTAL  2,433,000      8,496,000      6,063,000      249 

38AnnuaI  Report,  Illinois  Central  Railroad,  1859,  1870.     Cf.  Chap.  vi. 
39Eighth   Census    (1860),   volume   on   Agriculture,    Introduction;    cf. 

Martin,  The  Granger  Agitation. 

"Seventh  and  Ninth  Censuses  (1850,  1870). 


373]  TRAFFIC,  1857-1870  89 

The  immigrants  may  be  divided  into  groups  according  to  the 
relation  to  the  Illinois  Central  of  the  territory  settled  by  them: 

( 1 )  those  settling  in  Illinois  and  Iowa  tributary  to  the  railroad ; 

(2)  those  taking  up  land  in  parts  of  Illinois  and  Iowa  in  direct 
competition  with  the   Illinois   Central  territory  in  Wisconsin, 
Michigan  and  Missouri;    (3)     Those   going  to  Minnesota   and 
Kansas,  where  they  did  not  compete  actively  with  central  Illi- 
nois until  about  1870.     The  two  latter  groups  are  outside  the 
field  of  this  history,  but  it  may  be  said  that  their  growth  was 
much  slower  than  that  of  Illinois  and  Iowa  directly  tributary 
to  the  Illinois  Central  and  subsidiary  lines. 

While  this  immigration  went  into  every  portion  of  the 
state,  the  central  counties  along  the  Illinois  Central  Railroad, 
and  especially  those  between  La  Salle  and  Shelby  counties,  were 
the  least  settled  in  1850  and,  consequently,  offered  the  greatest 
opportunity  to  farmers.  In  the  twenty  years  from  1850  to  1870  out 
of  a  total  increase  of  population  of  1,688,000,  981,292  occurred 
in  the  belt  of  .counties  near  the  ' '  Central ' ',  and  in  the  latter  year 
slightly  over  one  half  of  the  inhabitants  of  the  state  lived  in  the 
forty  four  counties  tributary  to  this  railroad.41  In  1850  the 
central  counties  were  thinly  settled,  and  what  is  now  called  the 
"corn  belt"  was  almost  entirely  unoccupied  government  land, 
but  by  1870  this  portion  of  Illinois  had  been  transformed  into 

II. 

SETTLEMENT  OF  THE  FORTY  FOUR  COUNTIES  IN  ILLINOIS  TRIBUTARY  TO  THE 
ILLINOIS  CENTRAL  RAILROAD. 

1850     PER  CENT      i860       PER  CENT        l8/O      PER  CENT 

Group  I ii5,H3       12.4       291,829       17.0       495.253       19-5 

Group  II 248,868      30.2       585,548      34-3       923,579      36.6 

Cook  Co 43,385        4-2       144,954        8.4       349,966      13.8 


TOTAL  292,253      34.4       730,502      42.7     1,273,545      504 

State  851,000    100.0    1,711,000    100.0    2,539,000    100.0 

Group  I  consists  of  the  following  agricultural  counties  in  the  central 
part  of  the  state : — Bureau,  Champaign,  Coles,  De  Witt,  Douglas,  Ford, 
Iriquois,  Cumberland,  Kankakee,  La  Salle,  Livingstone,  Logan,  McLean, 
Macon,  Marshall,  Moultrie,  Putnam,  Shelby,  Woodford,  Piatt. 

Group  II  consists  of  the  above  counties  and  Alexander,  Bond,  Clay, 
Clinton,  Effingham,  Franklin,  Fayette,  Jackson,  Johnson,  Jefferson,  Jo 
Daviess,  Lee,  Marion,  Montgomery,  Ogle,  Perry,  Pulaski,  Stephenson, 
Union,  Will,  Williamson,  Washington.  All  of  these  counties  are  within 
fifteen  miles  of  the  Illinois  Central  Railroad  and  are  tributary  to  it. 
•"Seventh  and  Ninth  Censuses  (1850,  1870). 


90  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [374 

a  well  settled  farming  community.  With  the  growth  of  popu- 
lation the  area  not  under  cultivation  steadily  declined,  and  by 
1870  practically  all  the  land  surface  of  the  state,  especially  in  the 
central  part,  was  either  under  crop  or  else  used  for  meadow  or 
woodland.42  Early  in  the  sixth  decade  the  federal  land  was  sold 
and  the  railroad  grant,  with  the  exception  of  less  than  three 
hundred  thousand  acres,  was  disposed  of  by  1870.43 

The  rapid  settlement  of  Illinois  and  Iowa  was  accompanied, 
it  might  almost  be  said,  was  caused  by  important  improvements 
in  agriculture.  Improved  plows  and  harrows,  seeders,  cultiva- 
tors, binders,  reapers,  threshers,  corn  shellers  and  other  imple- 
ments were  introduced  and  it  became  possible  for  one  farmer  with 
the  aid  of  farm  machinery  to  raise  several  times  as  much  grain 
as  under  the  old  hand  method,  and,  that  too,  with  much  less, 
physical  exertion.  Naturally,  this  decreased  the  cost  of  raising 
a  crop  and  prevented  any  considerable  increase  in  the  price  of 
food  stuffs.  Accordingly,  it  was  possible  for  the  farmers  tribu- 
tary to  the  Illinois  Central  Kailroad,  despite  the  large  enlist- 
ment in  the  federal  armies  during  the  Civil  War  and  the 
growth  of  the  industries  of  the  state,  to  increase  their  production 
of  food  stuffs  sufficiently  to  meet  the  enormously  increased  de- 
mand of  the  eastern  states  during  the  decade  from  1861  to  1870, 
and  at  a  cost  of  production  low  enough  to  permit  good  profits 
to  themselves  and  high  rates  to  the  railroad.44 

Coincident  with  the  development  in  the  sources  of  demand 
and  supply  outlined  so  far,  viz.,  increased  eastern  and  European 
consumption  of  grain,  and  improved  rail  and  water  connections, 
on  the  one  hand,  and  settlement  of  the  interior  counties  of  Illi- 
nois, together  with  improved  farming  practice,  on  the  other 
hand,  came  the  development  of  the  traffic  organization  of  the 
Illinois  Central  Railroad  as  the  connecting  link  between  the  two. 
The  railroad  was  built  to  connect  these  sources  of  demand  and 
supply  in  food  stuffs  and,  until  long  after  1870,  it  was  primarily 
a  carrier  of  agricultural  products.  Therefore  the  prosperity  of 
the  company  was  dependent  upon  the  ability  of  the  adjacent 
territory  to  raise  and  ship  large  quantities  of  grain  and  of  live 
stock. 

"Seventh  and  Ninth  Censuses  (1850,  1870). 

43Annual  Report,  Illinois  Central  Railroad,  1870. 

*4Bogart,  Economic  History  of  the  United  States,  pp.  228-303;  Quin- 
tance,  The  Influence  of  Farm  Machinery  on  Crop  Production  and  Labor; 
Fite,  The  Agricultural  Development  of  the  West  during  the  Civil  War, 
Quar.  Jour.  Econ.,  XX,  259-278.  Cf.  Transactions  of  Illinois  State  Agri- 
cultural Society  during  this  period. 


375]  TRAFFIC,  1857-1870  91 

Prior  to  1870  the  Illinois  Central  Eailroad  was  the  vital 
factor  in  developing  central  and  southern  Illinois,  and  this  influ- 
ence commenced  as  soon  the  first  piece  of  track  was  laid  in  May, 
1852.  Of  course,  the  amount  of  traffic  handled  during  the  con- 
struction of  the  road  was  small  and  consisted  largely  of  local 
freight,  principally  immigrant's  goods,  but  even  in  this  way  it 
was  of  great  assistance  in  settling  the  interior  counties.  At 
first,  work  trains,  and  then  regular  freight  and  passenger  trains 
were  operated  on  sections  of  track  as  soon  as  completed,  and  in 
this  way  it  became  much  easier  for  settlers  to  reach  either  the 
government  or  railroad  lands  which  were  on  the  market.  How- 
ever, the  real  traffic  history  of  the  company  does  not  commence 
until  1855,  at  which  time  all  the  railroad,  with  the  exception  of 
seventy-seven  miles  from  Mattoon  to  Centralia,  was  in  use.45 

From  1857  to  1870  all  of  the  charter  lines,  together  with 
such  connections  as  were  added  from  time  to  time,  were  open 
for  traffic.  As  stated  in  Chapter  IV,  a  regular  freight  and 
passenger  service  was  established,  tariffs  were  promulgated, 
connections  were  secured,  aid  was  extended  to  farmers  along 
the  line ;  in  a  word,  everything  was  done  to  build  up  the  traffic 
of  the  road,  especially  that  of  grain  and  live  stock.  That  the 
railroad,  next  to  the  federal  government,  was  the  largest  single 
land  owner  in  the  country  naturally  stimulated  its  interest  in 
agricultural  production,  even  beyond  that  of  the  other  granger 
railroads. 

Moreover,  the  traffic  policy  of  the  Illinois  Central  Railroad 
was  greatly  influenced  by  the  fact  that  it  was  tributary  to  the 
Great  Lakes  as  well  as  to  the  Mississippi  River.  The  Civil  War 
and  other  causes  beyond  the  control  of  the  management  almost 
destroyed  the  historical  southern  market  of  Illinois  and  had  the 
railroad  been  constructed  as  originally  planned  its  traffic  would 
have  been  insignificant.  Having  been  built  tributary  to  Chicago 
as  well  as  to  Cairo  it  was,  however,  in  a  position  to  divert  busi- 
ness northward  when  its  natural  connections  with  the  South 
were  prostrate  and  Chicago  became  its  main  terminal.  For  that 
reason  prices  and  facilities  there  were  the  determining  factor 

^Annual  Report,  Illinois  Central  Railroad,  1855-1857.  The  net  earn- 
ings to  January  I,  1855,  amounted  to  $276,540.59.  Estimates  of  the  gross 
earnings  are  given,  but  they  are  so  incorrect,  it  is  not  worth  while  to 
repeat  them.  However,  the  approximate  gross  earnings  are  supposed  to 
have  been  about  three  quarters  of  a  million  dollars  in  the  period  prior  to 
the  first  annual  report  in  1855. 


92  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [376 

in  the  growth  of  the  railroad  and  of  that  part  of  Illinois  and, 
later,  of  Iowa  dependent  upon  it.48 

As  Illinois  was  primarily  an  agricultural  state  the  move- 
ment of  its  crops,  especially  corn  and  wheat,  depended  upon 
demands  outside  the  state,  in  other  words  upon  the  needs  of  the 
industrial  population  of  the  East  and  South.  But  whether  the 
farmer  in  McLean  or  Macon  county  would  ship  his  grain  at  all — 
the  vital  problem  for  the  railroad — was  decided  by  the  price  of 
grain  at  Chicago.  Unless  the  New  York  price,  less  the  cost  of 
transportation,  in  other  words  the  Chicago  price,  would  yield 
a  profit  on  a  bushel  of  corn  or  wheat,  the  farmer  would  not  ship 
it,  at  least  he  would  not  produce  and  ship  it  for  any  length  of 
time.  Fortunately  for  the  Illinois  Central,  the  price  of  all  farm 
products  was  high  from  1861  to  1870,  and  was  excessively  low 
in  only  one  or  two  years  before  that  period.  These  high  prices 
were  accompanied  by  large  demands  from  other  parts  of  the  coun- 
try, as  mentioned  above,  especially  in  the  period  from  1861  to 
1870,  and,  at  times,  the  supply  of  grain  was  insufficient  to  meet 
all  the  necessary  demands  of  the  north  Atlantic  states  and  Eu- 
rope. On  account  of  the  inflation  of  the  currency  the  increase 
in  currency  prices  was  very  great,  but  there  was  a  fair  advance 
in  gold  prices,  while  the  expenses  of  the  farmer  for  labor  and 
supplies  did  not  increase  as  rapidly  as  the  receipts  from  his  grain 
or  cattle.47  Of  the  different  grains  corn  had  the  greatest  rise  in 
price48  and  wheat  the  least,49  but  as  the  territory  dependent  on 
the  Illinois  Central  was  largely  corn  country  this  proved  of  ad- 
vantage to  both  the  farmer  and  the  railroad.  There  was  also  a 
large  increase  in  the  price  of  cattle ;  again  favoring  the  central 
counties  of  the  state.50 

The  general  adoption  of  labor  saving  machinery,  combined 
with  high  Chicago  prices  for  grain  and  a  large  demand  for  food 
stuffs,  had  a  very  strong  influence  on  the  production  of  grain  in 
the  territory  along  the  Illinois  Central  Railroad.  Vacant  gov- 

46The  rise  of  Chicago  as  the  leading  grain  and  live  stock  market  of 
the  world  was  coincident  with  the  developments  in  the  traffic  of  the  Illi- 
lois  Central  Railroad  mentioned  in  the  text  and  was  of  great  importance 
*:o  its  territory  in  affording  a  convenient  market  for  grain  and  live  stock. 

47Fite,  The  Agricultural  Development  of  the  West  During  the  Civil 
War,  Quar.  Jour.  Econ.,  XX,  259-278.  Cf.  Mitchell,  History  of  the  Green- 
backs. 

48Aldrich  Report,  II,  pp.  7,  8. 

49Ibid.,  pp.  60,  61. 

50Ibid.,  p.  26. 


377] 


TRAFFIC,    1857-1870 


93 


eminent  and  railroad  land  was  occupied  and  the  acreage  under 
cultivation  increased  rapidly  from  census  period  to  census  period. 
The  growth  in  some  of  the  interior  counties  was  remarkable. 
Champaign  county  increased  its  area  under  cultivation  from 
twenty  two  thousand  acres  in  1850  to  four  hundred  and  nine- 
teen thousand  in  1870;  Livingstone  from  thirteen  thousand  to 
three  hundred  and  seventy  seven  thousand,  and  Iroquois  from 
thirty  thousand  to  three  hundred  and  twenty  two  thousand.51 
The  twenty  one  typically  agricultural  counties  had  more  than 
seven  times  as  many  acres  under  cultivation  in  1870  as  in  1850, 
as  is  shown  in  the  following  table : — 


III. 


ACRES  UNDER  CULTIVATION,  1850  TO  1870. 


i8so 

Group  1 744,000 

Group  II 1,590,000 

Cook  Co 154,000 


PERCENT 

14.8 

31.6 


1860 

2,902,000 
5,101,000 

267,000 


PERCENT 
22.2 
38.3 
2-4 


1870  PERCENT 

5,337,OOO  27.6 

8,839,000  43.2 

348,000  1.8 


TOTAL  1,744,000 

State  5,039,000 


34.7        5,368,000        40.7        9,187,000        45.0 
100.0      13,096,000      100.0      19,329,000      loo.o52 


The  larger  area  in  farms  was  accompanied  by  a  greater  yield  of 
farm  products,  especially  corn,  wheat  and  oats.  It  was  also 
accompanied  by  a  greater  diversity  of  farming,  and  the  total  pro- 
duction of  the  three  staples,  consequently,  did  not  increase  as  rap- 
idly as  the  acreage  did.53  At  the  same  time  the  growth  of  the 
grain  crops  was  large  enough  to  attract  attention.  This  was  espe- 
cially true  of  the  central  agricultural  counties.  The  following 
tables  show  the  increased  yield  of  the  three  staples,  but  the  figures 
for  1869  (census  of  1870)  were  unduly  small,  owing  to  droughts, 
and  to  obtain  a  correct  estimate  of  the  increase  during  the  decade 
the  total  should  be  considered  about  twenty-five  per  cent  larger.54 

"Seventh,  Eighth,  and  Ninth  Censuses  (1850,  1860,  1870),  volumes  on 
Agriculture. 

52Ibid.;  for  the  counties  comprised  in  each  group,  see  Table  II;  per 
cent  refers  to  per  cent  of  total  acreage  contained  in  each  county  or  group 
of  counties.  Group  II  includes  Group  I. 

53Seventh,  Eighth,  and  Ninth  Censuses  (1850,  1860,  1870),  volumes  on 
Agriculture,  Introduction. 

"Ibid.,  1870. 


94 


HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD 


[378 


IV. 

PRODUCTION  OF  CORN,  1850  TO  1870. 

1850       PERCENT        i860        PERCENT  1870      PERCENT 

Group  1 9,985,000        17.7        29,613,000        25.8  39,265,000        30.2 

Group  II 16,890,000        29.3        44,302,000        38.6  59,257,000        45.6 

05CookCo 429,000           .7            877,000           .7  770,000           .5 

TOTAL 17,319,000       30.0       45,179,000       39.3       60,827,000       46.1 

State 57,646,000      loo.o      115,174,000      100.0      129,921,000      100.0 

V. 

PRODUCTION  OF  WHEAT,  1850  TO  1870. 

1850       PERCENT        i860       PERCENT        1870  PERCENT 

Group  1 949,000        10.1        4,105,000        17.6       4,043,000        12.8 

Group  II 2,171,000        25.1        8,870,000        37.2      10,625,000        35.4 

Cook  Co 238,000         2.7          299,000          1.3  149,000  .5 

TOTAL 2,409,000       25.8       9,169,000       38.5      10,774,000       35.9 

State  9,414,000      loo.o      23,837,000      100.0      30,128,000      ioo.o56 

VI. 
PRODUCTION  OF  OATS,  1850  TO  1870. 

l85O    PERCENT     i860    PERCENT     1870     PERCENT 

Group  1 1,275,000        12.0        2,330,000        15.4      10,619,000        24,8 

Group  II 3,174,000        30.2        5,865,000        38.8      20,421,000        47.7 

Cook  Co 403,000         4.0        1,092,000         7.2        1,584,000         2.8 

TOTAL  3,577,ooo       34.2       6,957,000       46.0     22,005,000       50.5 

State 10,087,000      ioo.o      15,220,000      ioo.o     42,780,000      100.0" 

These  tables  show  not  only  a  large  increase  in  all  crops,  but  also 
an  especial  emphasis,  particularly  in  the  corn  belt,  on  the  pro- 
duction of  oats  and  corn  instead  of  wheat.  The  increase  in  the 
production  of  wheat  in  the  state  between  1850  and  1860  amounted 
to  35.9  per  cent,  of  corn  46  per  cent,  and  of  oats  50.5  per  cent.  At 
the  same  time  the  total  amount  of  grain  produced  in  the  forty 
three  counties  along  the  Illinois  Central  (excluding  Cook  county) 
increased  from  21,200,000  bushels  in  1850  to  80,500,000  bushels 

"Seventh,  Eighth,  and  Ninth  Censuses  (1850,  1860,  1870),  volumes  on 
Agriculture. 
"Ibid. 
"Ibid. 


379]  TRAFFIC,  1857-1870  95 

in  1870,  or  369%.    The  number  of  sheep,  cattle  and  swine  on  the 
farms  will  be  taken  up  later  on  in  this  chapter. 

Having  seen  the  growth  of  grain  production  in  the  territory 
tributary  to  the  Illinois  Central  it  is  possible  to  ascertain  what 
influence  these  large  crops  had  upon  the  railroad.  In  the  preced- 
ing pages  it  was  shown  that  the  Illinois  Central  was  placed  in  a 
very  disadvantageous  position  in  1856  to  1870  in  regard  to  ship- 
ping grain  south  to  New  Orleans  and  that  economic  conditions 
diverted  western  grain  to  Chicago  and  the  east  and  west  trade 
route.  Although  not  to  its  interests,  the  "Central"  was  forced 
to  yield  to  outside  forces  and  make  Chicago,  not  Cairo,  its  prin- 
cipal terminus  for  the  handling  of  grain.  The  phenomenal  rise 
of  the  former  city  as  a  grain  center  is  a  familiar  story,  and  in  the 
period  under  discussion  the  Illinois  Central  did  as  much  as  any 
other  road  to  build  up  the  interests  of  this  city.  It  accomplished 
this  result  despite  its  unfavorable  location.  In  studying  the  map 
of  the  Illinois  Central  one  is  impressed  by  its  poor  arrangement 
so  far  as  shipments  to  Chicago  are  concerned.  It  is  better  situ- 
ated than  any  other  Illinois  road  for  the  handling  of  corn  and 
oats  from  a  large  portion  of  the  corn  belt,  but  is  in  a  weak  posi- 
tion so  far  as  wheat  from  the  northern  counties  is  concerned.  To 
carry  wheat  from,  say,  La  Salle  county  over  its  own  rails  it  must 
send  the  grain  south  to  Centralia  and  then  north  again  to  Chi- 
cago, or  about  three  times  as  great  a  distance  as  that  of  the  Chi- 
cago, Eock  Island  and  Pacific  route.58  The  same  condition  ex- 
isted in  the  handling  of  grain  from  many  of  the  counties  on  the 
main  line  north  of  Vandalia.  This  was  obviated  by  traffic  and 
trackage  agreements,  but  not  in  a  manner  profitable  to  the  ' '  Cen- 
tral." Up  to  1860,  the  Galena  and  Chicago  Union  line  from 
Freeport  to  Chicago  had  an  agreement  with  the  "Central"  by 
which  the  latter 's  business  from  points  north  and  south  of  Free- 
port  was  sent  to  Chicago  over  the  rails  of  the  Galena  road  in  the 
' '  Central 's ' '  cars.59  Later  a  similar  agreement  was  made  with  the 
Chicago,  Burlington  and  Quincy  from  Dixon,  but  on  somewhat 
less  favorable  terms.  However,  on  most  of  the  grain  originating 
north  of  the  Illinois  river  the  Illinois  Central  obtained  only  the 
short  haul  to  Freeport  or  Dixon,  while  the  other  railroad  received 
liberal  returns  for  carrying  the  cars  to  Chicago.  Relations  with 
the  Galena  or  Burlington  lines  were  not  always  friendly,  and 
from  1858  to  1870  another  means  of  uniting  the  main  line  and 
the  Chicago  branch  was  obtained.  The  Illinois  Central  assisted 

B8Cf.  Chap.  iv. 

^Annual  Report,  Illinois  Central  Railroad,  1855-1859. 


96  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [380 

in  the  construction  of  the  Peoria  and  Oquaka,  now  the  Toledo, 
Peoria  and  Western  branch  of  the  Pennsylvania  system,  and 
made  a  trackage  agreement  with  that  company  by  which  its  trains 
could  run  from  El  Paso  to  Gilman  over  the  latter  's  tracks.  By 
this  connection  the  two  arms  of  the  system  were  united  one  hun- 
dred and  sixty  miles  above  Centralia  and  the  company  was  in  a 
position  to  get  the  long  haul  on  shipments  to  Chicago.80 

Other  traffic  agreements  were  made  with  roads  intersecting 
the  Central  by  which  the  latter  got  the  haul  to  Chicago.  Impor- 
tant among  these  alliances  was  one  with  the  Great  Western,  now 
the  Wabash,  at  Tolono  and  Decatur,  the  Ohio  and  Mississippi  at 
Odin  and  Sandoval,  the  Alton  and  Terre  Haute,  now  the  St. 
Louis  Division  of  the  Big  Four,  at  Pana  and  Mattoon,  and  the 
Mineral  Point  railroads.61  By  far  the  most  permanent  alliance 
was  the  one  with  the  Dubuque  and  Sioux  City,  which,  as  de- 
scribed above,  was  leased  by  the  Illinois  Central  in  1867.  By  this 
arrangement  all  grain  originating  on  the  leased  lines  could  be  car- 
ried by  the  Illinois  Central  over  the  charter  lines.  Iowa,  at  this 
time,  was  a  very  important  wheat  growing  district  and  most  of 
the  grain  transferred  at  Dubuque  was  wheat.  Naturally,  this 
extension  of  the  system  had  an  important  influence  on  the  Illinois 
portion,  and  during  the  first  few  years  of  the  lease  control  of  the 
Dubuque  and  Sioux  City  was  profitable  to  the  Illinois  Central.62 

During  the  time  these  various  traffic  and  trackage  agree- 
ments were  being  completed,  the  receipts  of  wheat,  corn,  and  oats 
at  Chicago  over  the  tracks  of  the  Illinois  Central  grew  very  rap- 
idly. In  1855  only  a  part  of  the  road  was  in  operation  and  in 
1856,  1857,  and  1858  there  were  poor  crops,  while  most  of  the 
land  near  the  railroad  had  not  yet  been  settled.  As  a  result  the 
receipts  of  grain  at  Chicago  from  this  territory  were  small.  In 
1859,  1860,  and  1861,  and  most  of  the  remaining  years  of  the 
decade  crops  were  good  and  the  shipments  by  the  railroad  in- 
creased to  considerable  proportions.  Had  it  not  been  for  the 
exceedingly  low  prices  prevailing  during  much  of  the  period  from 
1857  to  1862  and  the  large  shipments  south  to  Cairo  from  1860 
to  the  close  of  the  war,  the  movement  would  undoubtedly  have 
been  much  greater.  The  largest  amount  of  any  one  grain  con- 


Report,  Illinois  Central  Railroad,  1857-1860.  The  Illinois 
Central  had  merely  a  trackage  agreement  with  this  company  and  in  later 
years  allowed  other  and  rival  railroads  to  control  this  company. 

«llbid.,  1855-1870. 

02Cf.  Chap,  vi,  for  statements  as  to  net  profits  accruing  to  the  Illinois 
Central  from  this  lease. 


381]  TRAFFIC,  1857-1870  97 

sisted  of  corn,  which  increased  from  758,901  bushels  in  1858  to 
6,903,430  bushels  in  1867  and  10,475,680  bushels  in  1871.63  Wheat 
shipments  grew  at  a  somewhat  slower  rate,  from  1,100,482 
bushels  in  the  earlier  year  to  5,244,540  bushels  in  the  latter.6* 
The  amount  of  oats  handled  remained  under  half  a  million  bush- 
els a  year  up  to  1865,  when  it  jumped  to  1,678,087  bushels  and 
to  4,258,340  bushels  in  1870.  This  rapid  increase  was  brought 
about  by  the  more  general  cultivation  of  this  grain  after  I860.65 
Compared  with  other  railroads  and  the  Illinois  and  Michigan 
Canal  the  Illinois  Central  was  always  one  of  the  leading  grain 
lines,  and  during  the  Civil  "War  period  it  handled  more  grain 
than  any  other  road,  with  the  possible  exception  of  the  Chicago, 
Burlington,  and  Quincy.  In  1858  the  Central  was  third  in  its 
receipts  of  corn  at  Chicago,  being  surpassed  by  the  Chicago,  Bur- 
lington, and  Quincy  and  the  Illinois  and  Michigan  Canal,  with 
the  Chicago  and  Northwestern  only  a  few  thousand  bushels  be- 
hind. In  1871  the  Illinois  Central  handled  more  corn  than  any 
other  line  entering  Chicago,  and  during  the  thirteen  years 
increased  its  proportion  of  the  total  receipts  from  8.1%  to 
24.8  %.66  In  1858  the  ''Central"  was  second  in  the  receipts  of 
wheat,  which  position  it  held  in  1870,  being  led  in  both  years  by 
the  Chicago  and  Northwestern.  Its  proportion  of  the  total  num- 
ber of  bushels  reported,  however,  increased  from  11.5%  to  30.2%-67 
The  growth  in  the  handling  of  oats  was  even  larger.  From  third 
place  in  1858  the  Illinois  Central  advanced  to  first  place  in  1870 
and  led  its  nearest  competitor  by  two  and  and  a  half  million 
bushels.  In  the  latter  year  it  delivered  40.9%  of  all  the  oats  re- 
ceived, as  against  only  4.9%  in  the  former  year.68  Moreover, 
these  figures  do  not  include  grain  handled  by  the  Galena  or  Chi- 
cago, Burlington  and  Quincy  or  Northwestern  railroads  for  the 
Illinois  Central  on  trackage  agreements.  Had  this  been  included 

03Annual  Report,  Illinois  Central  Railroad,  1858,  1867,  1871.  Itemized 
figures  are  not  given  before  1858. 

**Ibid.  There  is  a  slight  difference  between  the  figures  given  by  the 
Chicago  Board  of  Trade  and  the  railroad  due  to  different  "fiscal  years. 

osAnnual  Report,  Illinois  Central  Railroad,  1858-1870.  Cf.  Ninth  Cen- 
sus (1870),  volume  on  Agriculture,  Introduction,  under  heading,  Oats. 

09Annual  Report,  Chicago  Board  of  Trade,  1858-1870. 


68Ibid.  From  1867  to  1870  there  is  a  discrepancy  in  the  reports  of 
the  Illinois  Central,  and  the  figures  given  by  the  company  cannot  be  given 
for  the  period. 


98  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [382 

the  proportion  belonging  to  the  latter  road  would  have  been 
much  larger.  As  it  was,  27.2%  of  all  the  grain  received  at  Chi- 
cago came  in  over  the  tracks  of  the  Illinois  Central,  although  the 
Burlington,  Northwestern,  and  Kock  Island  systems  had  each  a 
much  larger  mileage.09 

While  the  great  bulk  of  the  grain  handled  by  the  company, 
despite  its  efforts  to  divert  the  traffic  southward,  was  forwarded 
to  Chicago,  the  receipts  at  Cairo  showed  a  healthy  growth  during 
the  period,  and  for  occasional  years  were  almost  as  large  as  the 
receipts  at  the  northern  end  of  the  road.  Prior  to  1860  the 
amount  of  wheat,  corn  and  oats  handled  at  Cairo  was  only  nom- 
inal, but  in  that  year,  and  the  first  few  months  of  1861,  the  south- 
ern movement  assumed  considerable  importance  as  the  result  of 
energetic  efforts  on  the  part  of  the  traffic  department.  River  and 
railroad  connections  to  Mobile  and  New  Orleans  were  improving 
and  the  company  believed  this  growth  was  permanent.70.  These 
prospects  were  rudely  shattered  by  the  outbreak  of  the  Civil 
War  and  the  occupation  of  Cairo  by  the  federal  troops  entirely 
destroyed  the  southern  grain  trade.  During  the  struggle  a  large 
proportion  of  the  supplies  furnished  the  Union  armies  in  Ken- 
tucky and  Tennessee  were  forwarded  by  way  of  Cairo,  and  the 
receipts  at  that  city  were  larger  from  1861  to  1867  than  ever 
before.  The  demand  for  oats  was  especially  large,  and  from 
49,068  bushels  in  1855  the  movement  increased  to  4,629,408 
bushels  in  1864.71  The  demands  of  the  army  for  corn,  although 
not  as  large  as  the  demands  for  oats,  were  considerable  and  were 
supplemented  by  the  requirements  of  the  civil  population  of  the 
South.  Thus,  the  maximum  receipts  occurred  in  1866,  just  after 
the  close  of  the  war,  and  amounted  to  2,350,841  bushels,  as 
against  only  6,873  bushels  in  1855.72  The  war  had  practically 
no  influence  on  the  receipts  of  wheat  and  the  tonnage  of  both 
wheat  and  flour  increased  until  after  the  war.  After  the  re- 
sumption of  peace  the  receipts  of  all  grains  at  Cairo  continued 
large,  but  the  amount  received  from  year  to  year  varied  consid- 

69 'Annual  Report,  Chicago  Board  of  Trade,  1858-1870;  Annual  Report, 
Illinois  Central  Railroad,  1856-1870,  showing  number  of  bushels  of  grain 
turned  over  to  the  respective  connecting  lines. 

70Annual  Report,  Illinois  Central  Railroad,  1860,  1861. 

71  Ibid.,  1861-1870.  Most  of  the  grain  was  destined,  directly  or  indi- 
rectly, for  the  army. 

72Ibid.,  1855-1870. 


383] 


TRAFFIC,   1857-1870 


99 


erably.73    Corn  more  than  held  its  own  in  1865,  1866,  and  1867, 
but  dropped  to  only  109,370  bushels  in  1868,  23,460  bushels  in 

7SAnnual  Report,  Illinois  Central  Railroad,  1855-1870.  The  following 
tables  show  the  proportion  of  grain  received  at  Chicago  and  Cairo  from 
1855  to  1870,  being  taken  from  the  Annual  Reports,  Illinois  Central 
Railroad. 

VII. 
COMPARATIVE  RECEIPTS  OF  CORN  AT  CHICAGO  AND  CAIRO,  1855  TO  1870. 

MISCEL- 


LANEOUS 

TOTAL 

CHICAGO 

PERCENT 

CAIRO 

PERCENT 

PERCENT 

1855 

902,600 

402,105 

44-5 

6,873 

•7 

54-8 

1857 

679,843 

242,115 

36.7 

6,116 

•9 

62.4 

1858 

993,571 

758,921 

76-3 

4,187 

•4 

23-3 

1859 

943,967 

780,943 

82.7 

22,823 

2.4 

14.9 

1860 

3,691,777 

2,839,659 

77-0 

727,880 

19.7 

3-3 

1861 

7,724,399 

5,341,303 

69.1 

2,119,320 

27-5 

3-4 

1862 

6,024,156 

4,346,301 

72.1 

166,536 

2.8 

25-1 

1863 

4,149,999 

3,597,331 

86.5 

17,863 

•4 

I3-I 

1864 

2,339,653 

1,721,749 

73-5 

228,508 

9-3 

17.2 

1865 

6,203,513 

4,433,270 

71-5 

1,133,220 

17.9 

10.6 

1866 

8,024,035 

5,443,824 

67.8 

2,350,841 

29-4 

2.8 

1867 

7,820,560 

5,970,519 

76.4 

1,678,090 

21.4 

1.2 

1868 

5,844,930 

5.844,930 

109,370 

1869 

5,717,890 

5,334,260 

23,460 

1870 

5,ii4,i30 

3,533,3io 

287,880 

For  some  reason,  the  total  number  of  bushels  of  oats,  corn  and  wheat 
handled  in  1868,  1869,  and  1870,  does  not  correspond  with  the  statistics 
before  1868  and  no  percentages  can  be  obtained  for  those  three  years. 

The  Miscellaneous  item  includes  shipments  turned  over  to  connecting 
roads,  such  as  the  Ohio  and  Mississippi  and  the  Galena  and  Chicago  Union, 
or  delivered  at  local  stations.  The  large  percentage  in  this  column  before 
1860  shows  the  importance  of  the  Galena  and  Chicago  Union  connection. 
In  1863,  1864,  and  1865  considerable  quantities  of  grain  were  turned,  over 
to  the  O.  &  M.  for  the  use  of  the  army. 

VIII. 

COMPARATIVE  RECEIPTS  OF  OATS  AT  CHICAGO  AND  CAIRO,  1855  TO  1870. 

MISCEL* 
LANEOUS 

PERCENT     PERCENT 
10.6  44.1 

14.3  6l.8 

42.9  22.5 

47-3  30.7 


TOTAL 

CHICAGO 

PERCENT 

CAIRO 

1855 

461,000 

209,600 

44-5 

49,068 

1857 

670,424 

160,265 

36.7 

95,881 

1858 

409,325 

141,334 

76.3 

17,551 

1859 

622,449 

137,596 

82.7 

294,595 

100  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [384 

1869  and  287,880  bushels  in  1870,  as  against  an  average  of  over 
sixteen  hundred  bushels  in  the  three  preceding  years.  Oats  de- 
creased in  a  similar  way  in  1868  and  1869,  but  recovered  in  1870. 
Wheat  actually  increased  after  the  war.  These  fluctuations  were 
much  greater  than  at  Chicago  and  indicate  the  lack  of  strength 
in  the  southern  movement  of  cereals.  In  the  aggregate  the  total 
number  of  bushels  forwarded  to  Cairo  as  compared  with  Chi- 
cago was  small,  except  during  the  six  years  from  1861  to  1867. 7* 
Next  to  grain  the  most  important  agricultural  commodity 
carried  by  the  Illinois  Central  was  live  stock — sheep,  hogs  and 
cattle.  Conditions  in  the  packing  industry  from  1856  to  1870 
were  radically  different  from  what  they  are  now  and  there  were 
serious  restrictions  upon  the  development  of  the  industry.  Re- 
frigerator cars  were  not  in  general  use  and  the  transportation 
of  fresh  meat  was  not  possible.  This  prevented  the  centralization 
of  meat  packing  in  the  "West,  which  took  place  a  few  years  later, 
and  the  shipment  of  pork,  beef  and  mutton  to  the  eastern  states. 
Instead,  most  of  the  meat  used  in  that  territory  was  packed  in 
local  establishments  from  homebred  live  stock,  or  animals  sent 
from  the  West  on  the  hoof.  Even  the  shipment  of  western  live 
stock  for  slaughter  in  eastern  cities  was  handicapped  by  the  high 
cost  of  railroad  transportation — shipment  by  lake  being  out  of 
the  question — and  by  the  difficulty  of  carrying  the  animals  long 
distances  without  great  depreciation  in  value.  Moreover,  the 
number  of  small,  local  packing  houses  was  large  in  the  West  as 
well  as  in  the  East.  On  the  other  hand  great  quantities  of  pork 
and  beef  were  salted  or  pickled  and  in  that  condition  could  be  car. 
ried  long  distances.  Thus,  the  market  for  meat  products  was  not 
confined  entirely  to  the  territory  within  a  few  miles  of  the  pack- 
ing house. 

1860  1,329,108  202,967         77.0  934,007         71.1  13.1 

1861  793,244  262,209         69.1  457,398         59-2  7-8 

1862  1,760,066  534,659  72.1  427,693  24.2  45.4 

1863  4,581,731  605,040  86.5  2,083,639  43.3  43.3 

1864  7,794,095  214,158  73.5  4,629,408  59.5  13.0 

1865  4,518,731  1,605,443  71.5  2,141,806  46.4  18.2 

1866  4,002,825  2,358,285  67.8  836,115  20.4  20.9 

1867  4,863,110  3,302,140  76.4  1,136,530  23.4  8.1 

1868  5,082,090  5,082,090  350,000 

1869  3,830,620  4,015,590  522,340 

1870  5,641,870  4,258,340  1,414,180 

74Annual  Report,  Illinois  Central  Railroad,  1855-1870;  cf.  Report  of  the 
Delegates  Appointed  by  the  English  and  Dutch  Shareholders,  1877. 


385]  TRAFFIC,  1857-1870  101 

The  conditions  outlined  above  affected  the  Illinois  Central 
in  two  ways.  The  high  cost  of  transporting  live  stock  prevented 
the  use  of  the  territory  beyond  the  Mississippi  until  after  the 
close  of  the  Civil  War,  and  made  Illinois  the  natural  center  of 
the  industry.  Moreover,  from  1856  to  about  1863  or  1864  only 
that  portion  of  the  state  within  a  hundred  and  fifty  miles  of 
Chicago,  which  even  then  was  the  center  of  live  stock  shipment, 
could  send  its  sheep,  hogs  or  cattle  to  market.  But  while  this 
gave  the  central  counties  of  the  state  an  advantage  over  their 
competitors  it  limited  the  number  of  animals  which  could  be 
slaughtered  at  Chicago  or  sent  east  from  there  to  the  packing 
houses  on  the  Atlantic  coast.  As  the  number  of  farmers  was 
comparatively  small  at  this  time,  it  was  profitable  for  them  to 
raise  live  stock,  but  restricted  the  number  of  cattle  carried  on 
the  railroad.  After  the  Civil  War  railway  rates  were  reduced 
and  the  trans-Mississippi  territory  became  a  strong  competitor 
of  central  Illinois. 

There  were  other  influences  of  a  somewhat  local  nature 
which  affected  the  industry  in  the  counties  along  the  Illinois 
Central.  One  of  the  most  important  of  these  was  the  cost  of  corn. 
Prior  to  1860  corn  on  the  farm  was  of  little  value  and  it  was 
usually  cheaper  to  feed  it  to  swine  or  cattle  than  to  attempt  to 
ship  it.  Thus,  the  amount  of  grain  forwarded  from  local  stations 
along  the  railroad  was  much  smaller  than  the  large  crops  would 
have  permitted.  During  the  Civil  War  period  the  price  of  corn 
was  high  and  the  farmers  found  it  more  profitable  to  ship  it  in 
bulk  than  "on  the  hoof".  After  the  war  there  was  a  decline  in 
the  price  of  corn,  and  the  high  prices  of  meat  induced  the  farm- 
ers to  raise  a  much  larger  number  of  animals  than  before. 

As  would  be  expected  from  these  changing  conditions,  the 
number  of  live  stock  on  the  farms  of  the  state  fluctuated,  although 
the  general  tendency  was  upwards.  The  central  counties  profited 
the  most  by  this  increase.  Evidently  the  growers  of  the  period 
did  not  find  it  profitable  to  fatten  hogs  and  cattle  entirely  on 
corn,  for  the  census  returns  show  that  the  counties  raising  the 
largest  amount  of  grain  did  not  have  the  largest  number  of  meat 
cattle.  For  some  reason  or  other,  possibly  the  high  price  of  cot- 
ton which  stimulated  the  production  of  wool  as  a  substitute  for 
cotton  in  the  making  of  clothing,  the  number  of  sheep  much  more 
than  doubled  in  the  decade  from  1860  to  1870  and  nearly  tripled 


102 


HISTORY    OF   ILLINOIS    CENTRAL   RAILROAD 


[386 


in  the  central  agricultural  counties  along  the  Illinois  Central 
Eailroad.75 

In  the  decade  from  1860  to  1870  Chicago  became  the  lead- 
ing packing  center  of  the  country,  and,  thus,  afforded  a  market 
for  the  growing  number  of  live  stock  in  the  state  and  especially 
in  that  portion  near  the  Illinois  Central.  Prior  to  the  war  the 
Illinois  Central  ranked  second  among  the  railroads  entering 
Chicago  in  the  number  of  hogs  and  cattle  received,  being  preceded 
by  the  Chicago,  Burlington  and  Quincy  and  closely  followed  by 
the  Northwestern,  the  Rock  Island  and  the  Alton.76  During  the 
war  the  high  price  of  corn  and  other  unfavorable  conditions 
affected  the  Illinois  Central  more  than  the  other  roads,  and  it 

75The  growth  of  the  live  stock  industry  in  the  state  is  shown  by  the 
following  tables,  which  are  taken  from  the  census  reports : 

IX. 

NUMBER  OF  SWINE  ON  FARMS,  1850  TO  1870. 

1850         PERCENT        i860  PERCENT        1870      PERCENT 

Group  I                251,187          13.1           449,079  17-9           581,178          21.5 

Group  II             620,536         32.6        1,110,097  44.3        1,074,946         39.8 

Cook  Co.                 9,398             .5             13,587  -5             15,552             .6 


TOTAL 
State 


Group  I 
Group   II 
Cook  Co. 

TOTAL 
State 


Group  I 
Group  II 
Cook  Co. 


630,934          33-1 
I.91 5,9°7        100.00 


1,113,684 
2,502,308 

X. 


44-8 

IOO.O 


1,094,467 
2,703,343 


40.4 

IOO.O 


NUMBER  OF  CATTLE  ON  FARMS,  1850  TO  1870. 

l85O              PERCENT           i860  PERCENT            1870        PERCENT 

00,332              l6.7                l66,6l5  17.2               265,683              25.1 

187,954          34-6           436,096  45.1           454,495          43-O 

11,155           2.6             14,432  2.00            14,431            1.4 


199,109 
541,209 


37-2 

IOO.O 


455,408          47.1 

970,799  IOO.O 


468,926 
1,055,499 


444 

IOO.O 


XI. 


NUMBER  OF  SHEEP  ON  FARMS,  1850  TO  1870. 

1850          PERCENT        i860  PERCENT        1870      PERCENT 

138,403          15.5           111,669  14-5           292,605          18.6 

285,964      32.0      163,514  21.2      593,368     37-8 

13,496            1.5              8,653  i.i             10,622             .6 


TOTAL  299,460         33.5  172,167         22.3          603,990 

State  894,043        loo.o          760,735        100.0        1,568,286 

™  Annual  Report,  Chicago  Board  of  Trade,  1858-1861. 


38.4 


387]  TRAFFIC,  1857-1870  103 

brought  in  the  smallest  number  of  any  of  the  large  systems.77 
Beginning  with  1866  the  territory  tributary  to  the  ' '  Central ' '  was 
better  situated  than  its  competitors,  and  the  railroad  again  as- 
sumed second  position,  with  the  Burlington  still  ahead.78  The 
other  three  important  roads  were  not  far  behind,  and  excepting 
the  Burlington,  there  was  not  a  great  difference  between  the  num- 
ber handled  by  each. 

The  shipments  of  live  stock  constituted  an  appreciable  part 
of  the  traffic  of  the  road.  There  were  over  four  times  as  many 
hogs  and  cattle  shipped  to  Chicago  in  1870  as  the  average  from 
1858  to  1860.  For  instance,  in  1870,  the  Chicago  Board  of  Trade 
credits  the  railroad  with  receipts  of  379,513  hogs,  87,915  cattle, 
and  89,597  sheep,  equivalent  to  about  eighty  eight  thousand  tons.79 
This  was  equivalent  to  6.5%  of  the  total  tonnage  handled  by  the 
system  in  that  year.80  As  the  rates  and  the  average  haul  of  this 
class  of  freight  were  considerably  greater  than  the  average  the 
business  must  have  amounted  to  at  least  ten  per  cent  of  the  gross 
earnings.81  The  company  endeavored  to  encourage  live  stock 
shipments,  though  entirely  as  an  addition  to  the  regular  move- 
ment of  grain,  and  the  results,  judging  from  the  above,  were 
satisfactory. 

Nearly  all  the  live  stock  handled  by  the  company  was  sent  to 
Chicago,  and,  in  1867,  the  last  year  for  which  complete  data  is 
available,  82.5%  of  the  cattle,  85.8%  of  the  sheep  and  82.5%  of 
the  hogs  were  forwarded  to  that  city.  The  demands  of  the  local 
butchers  were  undoubtedly  satisfied  by  animals  driven  into  town 
on  the  hoof.  Moreover,  from  a  comparison  of  tables  IX,  X, 
and  XI,  it  is  evident  that  the  shipments  over  the  Illinois  Central 
constituted  a  large  proportion  of  the  number  of  animals  on  the 
farms  immediately  contiguous  to  the  railroad.  Thus,  from  the 
rapid  increase  in  the  shipments  to  Chicago  and  the  correspond- 
ingly rapid  growth  after  1860  on  the  farms,  it  is  safe  to  assume 
that  the  live  stock  industry  was  a  reasonably  profitable  one. 

The  minor  lines  of  agriculture,  such  as  truck  farming,  fruit 
growing,  dairying,  the  production  of  hay,  vegetables,  etc.,  were 

77 'Annual  Report,  Chicago  Board  of  Trade,  1861-1866. 
™Ibid.,  1866-1870. 

79Ibid.,   1870.     The   figures   are  not  given  by  the   railroad   company. 
Sheep  and  hogs  are  estimated  at  200  pounds  each,  cattle  at  1000. 
s°Annual  Report,  Illinois  Central  Railroad,  1870. 
Sllbid. 


104  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [388 

comparatively  unimportant.  Except  for  a  small  territory  adja- 
cent to  Chicago  there  was  little  demand  for  truck  or  dairy  prod- 
ucts. Small  quantities  of  butter,  eggs,  cheese,  and  vegetables 
were  carried  on  the  railroad,  but  the  aggregate  tonnage  or  earn- 
ings were  insignificant,  never  exceeding  one  per  cent  of  the  gross 
tonnage.82  As  the  territory  adjacent  to  the  Illinois  Central, 
except  a  few  counties  in  the  northern  part  of  the  state,  is  not 
adapted  to  either  truck  farming  or  dairying  this  is  not  surpris- 
ing. The  amount  of  hay  handled  was  also  small  and  constituted 
a  little  more  than  one  per  cent  of  the  gross  tonnage  and  about 
the  same  proportion  of  earnings.83 

Fruit  growing  was  more  important.  Southern  Illinois  be- 
tween Cairo  and  Centralia  was  well  adapted  to  fruit  raising  and 
by  the  close  of  the  Civil  War  this  region  was  sending  considerable 
quantities  of  apples,  peaches,  strawberries,  and  other  small  fruit 
to  the  Chicago  market.  During  the  height  of  the  season  special 
trains  were  run  from  Cairo  to  Chicago  on  passenger  schedule  and 
the  fruit  was  placed  in  the  city  in  time  for  the  morning  markets. 
The  railroad  encouraged  the  development  of  this  traffic  by  special 
service  and  reduced  rates,  and  a  large  proportion  of  the  perish- 
able fruit  supply  of  Chicago  came  from  southern  Illinois.  Ex- 
press rates  were  charged  for  the  freight — not  unreasonable  con- 
sidering the  service  and  character  of  the  commodity — but  the 
total  revenue  was  small.  As  late  as  1870  only  ten  thousand  tons 
of  both  vegetables  and  fruit  were  handled  by  the  railroad.84 

On  the  whole,  the  Illinois  Central  developed  the  agricultural 
resources  of  the  territory  dependent  upon  it  as  much  as  could 
reasonably  have  been  expected.  While  rates  on  grain,  live  stock, 
and  other  farm  products  were  high  and  prevented  a  larger  move- 
ment than  took  place,  the  railroad  established  as  low  charges  as 
would  yield  it  a  good  profit.  Methods  of  operation  common  to 
all  railroads  of  the  period,  the  lack  of  a  large  tonnage,  the  geo- 
graphical location  of  the  line,  the  direction  of  traffic,  all  com- 
bined to  make  low  charges  impracticable.  The  Illinois  Central 
was  not  the  only  railroad  handicapped  by  these  difficulties  and, 
taking  everything  into  consideration,  it  did  as  much  to  build  up 
the  portion  of  the  state  through  which  it  passed  as  the  North- 
western, Burlington,  Eock  Island,  or  Alton  did  to  assist  the  coun- 
ties of  Illinois,  Wisconsin  or  Iowa  through  which  they  ran.  On  the 
other  hand,  the  farms  of  the  state  developed  the  railroad  as  much 

82Annual  Report,  Illinois  Central  Railroad,  1855-1870. 
*3Ibid. 


389]  TRAFFIC,  1857-1870  105 

as  the  railroad  developed  their  interests.  The  over  sanguine 
prophecies  of  vice  president  Neal  were  not  fulfilled  until  after 
the  Civil  War,  but  after  the  central  part  of  the  state  once  com- 
menced to  grow  it  turned  over  to  the  railroad  all  the  grain  and 
live  stock  it  could  handle. 

Next  to  agricultural  products  lumber  was  the  most  important 
commodity  handled  by  the  railroad.  Except  along  the  streams 
central  Illinois  between  Kankakee  and  Effingham  was  very 
sparsely  wooded,  and  what  timber  was  found  was  poorly  adapted 
for  fuel  or  building  purposes.  Necessarily,  most  of  the  lumber 
and  wood  used  in  this  region  had  to  be  brought  from  places  where 
timber  was  more  abundant.  In  1856  to  1870  there  were  three 
sources  from  which  the  supply  came;  (1)  southern  Illinois;  (2) 
northern  Illinois  and  southern  "Wisconsin;  (3)  the  timber  re- 
gions of  the  Northwest  (handled  by  way  of  Chicago).  As  the 
amount  of  building  going  on  during  the  settlement  of  the  state 
was  large  in  proportion  to  the  population  and  as  wood  was  the 
common  fuel  until  long  after  1870  the  demands  for  lumber  and 
wood  were  large.85 

Places  along  the  main  line  and  the  Chicago  branch  as  far 
north  as  Vandalia  and  Mattoon  were  supplied  from  the  forests 
of  southern  Illinois.  A  small  territory  just  south  of  the  Illinois 
river  depended  on  northern  Illinois  and  southern  Wisconsin.  The 
remainder  of  the  supply  came  from  Chicago.  Practically  all  the 
lumber  that  left  the  city  by  railroad  was  sent  south  over  the 
tracks  of  the  Illinois  Central,  and  this  one  item  amounted  to  over 
half  of  the  total  tonnage  forwarded  from  Chicago  by  the  com- 
pany. At  first  the  rates  on  lumber  were  placed  so  high  it  could 
not  be  transported  more  than  a  hundred  to  a  hundred  and  fifty 
miles  and  the  poorer  wood  from  the  southern  part  of  the  state  was 
used  in  considerable  quantities.  Later  improved  methods  of 
operation  and  the  presence  of  a  large  number  of  empty  cars  in 
Chicago,  arising  from  the  excess  of  northbound  over  southbound 
shipments,  enabled  the  company  to  reduce  its  charges.  These 
reductions  stimulated  the  growth  of  shipments  from  Chicago,  and 
by  the  close  of  the  decade  from  1860  to  1870  nearly  ninety  per 
cent  of  the  lumber  handled  by  the  railroad  originated  in  Chi- 
cago.86 At  the  same  time  the  absolute  tonnage  forwarded  steadily 
increased,  though  much  more  slowly  than  the  general  traffic  of 

85Letters  of  David  Neal  and  Robert  Rantoul  on  resources  of  Illinois, 
in  Documents  Relating  to  the  Organization  of  the  Illinois  Central  Rail- 
road. 

s&Annual  Report,  Illinois  Central  Railroad,  1867. 


106  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [390 

the  system.  As  the  heavy  movement  of  grain  and  live  stock  to 
Chicago  greatly  exceeded  the  return  shipments  of  merchandise 
and  miscellanies,  the  growth  of  the  lumber  traffic  provided  south- 
bound loads  for  a  large  proportion  of  the  equipment.  By  this 
arrangement  the  cost  of  carriage  of  both  grain  and  lumber  could 
be  reduced  and  lower  rates  established.  The  result  was  benefi- 
cial to  the  agricultural  districts  of  the  state  in  that  it  increased 
the  price  of  their  corn  or  wheat  and  decreased  the  cost  of  lum- 
ber and  fuel.87 

The  third  largest  single  article  of  freight  handled  by  the 
railroad  was  coal.  As  stated  in  Chapter  I,  there  were  three  im- 
portant coal  fields  near  the  Illinois  Central:  the  Danville,  Du 
Quoin,  and  La  Salle  mines.  A  few  scattered  mines  were  in  exist- 
ence, but  their  output  was  of  slight  importance.  When  the  rail- 
road was  built  it  was  supposed  that  the  mines  near  Danville 
would  ship  large  quantities  of  coal  to  Chicago  by  way  of  the 
Great  Western,  now  the  Wabash,  to  Tolono,  and  by  the  Illinois 
Central  from  there  north.88  The  company  was  disappointed  in 
this  expectation  and  for  various  reasons,  principally  the  compe- 
tition of  the  Ohio  coal,  the  tonnage  handled  was  negligible.89 
The  other  two  fields  were  of  more  importance.  At  first  the  mines 
at  both  places  were  handicapped  by  a  high  cost  of  operation,  but 
as  the  country  became  more  thickly  settled  and  the  mines  larger 
this  difficulty  was  removed.  Their  usefulness,  however,  was  lim- 
ited by  the  high  railway  charges  in  effect.  In  1856  to  1870  the 
small  amount  of  tonnage  handled,  the  poor  methods  of  operation, 
and  other  causes,  made  it  absolutely  impossible  for  the  railroad 
to  make  low  rates  on  such  bulky  goods  as  coal.  From  a  cent  to 
a  cent  and  a  half  a  ton-mile  was  the  lowest  charge  the  Illinois 
Central  made  under  the  most  favorable  conditions.  As  the  coal 
fields  were  from  two  hundred  to  two  hundred  and  fifty  miles 
from  a  large  market  the  high  tariff  prevented  the  transportation 
of  coal  to  those  markets.  Under  ordinary  circumstances  a  hun- 
dred miles  was  about  as  far  as  the  coal  could  be  carried  and  the 

87The  fact  that  the  Illinois  Central  had  a  large  return  tonnage  from 
Chicago  was  an  important  factor  in  keeping  the  rates  on  grain  and  live 
stock  from  advancing.  Instead  of  the  northbound  freight  having  to 
stand  the  cost  of  carriage  both  ways,  loaded  up  and  empty  down,  it  had 
to  provide  for  only  the  upbound  expenses. 

88Letter  of  D.  Neal,  Documents  Relating  to  the  Organisation  of  the 
Illinois  Central  Railroad. 

89Annual  Report,  Illinois  Central  Railroad,  1855-1860. 


391]  TRAFFIC,  1857-1870  107 

production  of  the  mines  was  limited  to  the  demands  of  such  a 
territory.90 

Moreover,  coal,  as  a  fuel,  was  forced  to  compete  with  wood. 
When  the  Illinois  Central  was  built,  wood  was  the  universal  fuel, 
and  even  the  company's  locomotives  were  wood  burners.  After 
a  series  of  tests,  the  railroad  began  to  use  coal  instead  of  wood 
on  its  engines,  and,  to  increase  its  traffic,  endeavored  to  stimulate 
the  demand  for  "stone  coal"  as  it  was  termed.91  For  a  long 
time  the  prejudice  in  favor  of  wood,  supplemented  by  an  abun- 
dance in  districts  near  the  mines,  prevented  its  general  use,  and 
it  was  not  until  after  the  Civil  War  that  coal  was  burnt  to  any 
considerable  extent.  Furthermore,  Ohio  or  Pennsylvania  coal, 
owing  to  the  all  water  route,  was  much  cheaper  at  Chicago  than 
Illinois  coal.  Only  a  few  mines  on  the  Chicago  and  Alton,  and 
Rock  Island  were  in  a  position  to  compete  with  the  eastern  prod- 
uct.92 Under  the  circumstances,  the  market  for  coal  mined  on 
the  Illinois  Central  was  not  great. 

Nevertheless,  there  was  a  steady  increase  in  product.  Slightly 
over  two  hundred  thousand  tons,  in  addition  to  that  used  by  the 
company,  was  forwarded  from  the  mines  in  1870.  This  was  some- 
thing over  three  times  as  much  as  was  shipped  in  1857,  and  thir- 
teen times  as  much  as  in  1855.93  From  1857  to  1864  the  amount 
mined  remained  nearly  stationary,  but  in  the  next  seven  years 
it  increased  to  over  two  hundred  thousand  tons.94  This  was 
caused  by  the  exhaustion  of  the  forests,  the  growing  demands 
for  industrial  purposes  and  the  decline  of  the  prejudice  against 
coal.  In  1870  it  amounted  to  14.9%  of  all  the  tonnage  handled 
by  the  railroad.  Both  the  rates  and  the  length  of  haul  were  less 
than  the  average  and  the  total  gross  receipts  must  have  formed 
a  much  smaller  percentage  of  the  total  earnings.  Taking  into  con- 
sideration earnings  and  cost  of  service,  coal  was  of  less  impor- 
tance to  the  railroad  than  the  live  stock  traffic  if  the  two  are 
compared  on  the  basis  of  gross  and  net  earnings.  The  chief  value 
of  the  coal  traffic  was  in  its  indirect  benefits  to  the  manufacturing 
and  commercial  interests  of  the  state. 

The  least  prominent  of  the  industries  of  Illinois  affecting  the 

90J.  W.  Foster,  Mineral  Resources  of  the  Illinois  Central  Railroad. 

^Annual  Report,  Illinois  Central  Railroad,  1858. 

92The  Chicago  &  Alton  was  the  only  railroad  which  brought  any  con- 
siderable amount  of  coal  into  Chicago.  Annual  Report,  Chicago  Board  of 
Trade. 

B3Annual  Report,  Illinois  Central  Railroad,  1855-1870. 

»*Ibid.,  1870. 


108  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [392 

Illinois  Central  was  manufacturing.  As  has  been  stated,  Illinois 
was  primarily  an  agricultural  commonwealth  in  1870,  and  the 
territory  tributary  to  the  "Central",  aside  from  Chicago,  was 
the  distinctly  farming  portion.  From  Kensington  to  Cairo  and 
from  Centralia  to  Dunleith  there  were  only  three  cities  that  were 
manufacturing  centers  of  any  prominence — Galena,  Decatur,  and 
Bloomington,  and  none  of  these  places  had  any  large  industries. 
Even  Chicago  was  not  an  industrial  center  of  the  first  rank.  Its 
commercial  interests,  such  as  shipping,  the  handling  of  lumber, 
live  stock  and  grain  and  the  transfer  of  freight  between  east  and 
west  lines,  were  very  large,  but  it  did  not  manufacture  many 
kinds  of  merchandise  which  were  consumed  by  the  agricultural 
population  of  the  state.  Farm  machinery  and  such  goods  formed 
the  great  bulk  of  the  merchandise  or  miscellaneous  shipments 
originating  there.95  In  the  remainder  of  the  territory  tributary 
to  the  Illinois  Central  manufacturing  was  confined  to  the  produc- 
tion of  simple  articles  for  local  use,  the  important  lines  being 
the  making  of  boots  and  shoes,  clothing,  woodenware  and  other 
articles  of  wood,  some  farm  machinery,  whiskey  and  other  alco- 
holic liquors.  In  1860  less  than  one  per  cent  of  the  total  popu- 
lation of  the  counties  between  Shelby  and  La  Salle  were  engaged 
in  manufacturing,  and  the  proportion  in  1870  was  not  much 
larger.98 

Moreover,  the  products  made  in  these  village  or  city  plants 
were  those  used  in  the  immediate  locality.  With  the  exception 
of  a  few  factories  in  Chicago  and  a  much  smaller  number  in  the 
remainder  of  the  Illinois  Central  territory  the  manufacturing 
establishments  enumerated  in  the  censuses  did  not  send  freight 
over  the  railroad.  Nor  did  they  bring  in  large  quantities  of  raw 
material,  since  most  of  the  goods  they  manufactured  were  made 
from  materials  raised  locally  or  else  were  of  comparatively  small 
value.  Thus,  the  total  amount  of  freight  handled  to  or  from  the 
manufacturies  of  the  state  was  of  much  less  importance  than  the 
products  of  mines,  farms  or  forests. 

However,  there  was  a  large  tonnage  of  merchandise  and  sun- 
dries either  brought  from  the  east  for  domestic  consumption  or 
sent  over  the  railroad  for  points  beyond  its  rails.  Including 
domestic  manufactures,  the  absolute  amount  and  relative  propor- 
tion of  this  high  class  freight  steadily  increased  from  1857  to 

95Eighth    and    Ninth    Censuses    (1860,    1870),   volumes   on    Manufac- 
tures. 

•'Eighth  Census  (1860),  volumes  on  Manufactures  and  Agriculture. 


393]  TRAFFIC,  1857-1870  109 

1870.  In  the  former  year  it  formed  14.5%  of  the  total  traffic  and 
21.1%  in  1870.97  During  this  time  the  absolute  tonnage  increased 
from  64,298  tons  to  283,756  tons,  or  342%. 9S  As  most  of  the 
freight  classed  as  merchandise  or  sundry  was  carried  at  rates 
higher  than  the  average  and  for  longer  distances,  the  gross  receipts 
in  1870  must  have  amounted  to  nearly  a  quarter  of  the  total 
earnings  of  the  road,  while  the  net  results  from  this  traffic, 
presumably,  were  even  more  satisfactory.  However,  it  is  uncer- 
tain just  what  items  are  included  in  sundries,  and,  for  that  rea- 
son, the  above  proportion  may  be  too  large.  Furthermore,  much 
of  the  merchandise  was  carried  at  through  rates  which  were  very 
much  lower  than  the  local  charges.  This,  again,  may  be 
a  cause  of  error.  At  any  rate,  the  tonnage  and  gross  earnings 
of  the  two  items  make  them  second  only  to  agriculture  in  impor- 
tance. 

The  traffic  of  the  railroad,  viewed  as  a  unit,  increased  quite 
as  rapidly  as  did  the  special  lines  mentioned  above.  In 
1855  the  central  part  of  the  state  was  thinly  settled,  there  was 
not  a  large  amount  of  surplus  product  to  be  shipped,  nor  were 
the  settlers  able  to  purchase  any  considerable  quantity  of  mer- 
chandise, lumber,  salt,  or  other  necessities  or  luxuries.  But  as 
the  railroad  became  better  established,  the  number  of  people 
in  the  tributary  territory  larger,  and  their  purchasing  power 
greater,  there  was  a  rapid  development  of  the  traffic  of  the  road. 
In  the  sixteen  years  from  1855  to  1870  the  number  of  tons  of 
freight  handled  by  the  road  as  a  whole,  including  the  leased 
lines,  grew  nearly  six  fold  and  the  number  of  ton  miles  nearly 
nine  fold."  On  the  charter  lines  alone  over  five  times  as  much 
tonnage  was  handled  in  1870  as  in  1855.100  As  the  average  rates 
remained  about  constant  during  the  period  gross  earnings  in- 
creased in  about  the  same  proportion  as  the  number  of  ton 
miles.101  By  1870  the  traffic  on  the  Illinois  lines  was  about  all 
that  the  company  was  able  to  handle  with  its  equipment  and  the 

97 'Annual  Report,  Illinois  Central  Railroad,  1855-1870. 

**Ibid. 

"Ibid. 


110 


HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD 


[394 


poor  operating  methods  then  in  use,  and  this  condition  had  existed 
since  the  commencement  of  the  war.102 

The  great  bulk  of  the  freight  handled  by  the  railroad  was 
classed  as  local,  that  is,  it  both  originated  and  terminated  at  the 
company's  stations.  In  1868  over  ninety  six  per, cent  was  local, 
and  only  four  per  cent  through.  In  no  year  was  the  proportion 
of  the  latter  to  total  traffic  more  than  fifteen  per  cent,  and  usually 
it  was  less  than  ten.103  Moreover,  the  local  traffic  increased  more 
rapidly  than  the  through  traffic,  despite  the  efforts  of  the  com- 
pany to  increase  its  interchange  business  and  to  develop  through 
connections.  As  the  railroad  reached  the  important  distributing 
and  receiving  centers  of  the  state  over  its  own  rails,  through  busi- 

102Annual  Report,  Illinois  Central  Railroad,  1855-1870;  see  following 
table : 

XII. 


INCREASE  IN  FREIGHT  TRAFFIC;  SYSTEM. 


TONS  OF 

FREIGHT 

1855 

241,704 

1859 

422,433 

1870 

1,623,944 

INCREASE 

1,401,511 

333% 
103Ibid,;  see  following  table 


51,650,364 
265,409,371 
213,759,007  413% 


AVERAGE 
HAUL, 
MILES 

122 

16343 
4143     34-8% 


XIII. 


CHARTER  LINES. 


PROPORTION  OF  GRAIN,  LIVE  STOCK,  LUMBER,  COAL  AND  MERCHANDISE  TON- 
NAGE TO  WHOLE  TRAFFIC,  1850  TO  1870. 


GRAIN 

LIVE  STOCK 

LUMBER 

COAL 

MERCHANDISE 

TOTAL 

PERCENT 

PERCENT 

PERCENT 

PERCENT 

PERCENT 

PERCENT 

1857 

29 

6.8 

24.2 

134 

14.6 

IOO.O 

1858 

30.8 

6.3 

23.6 

15.1 

14.6 

IOO.O 

1859 

23-7 

4-5 

19.4 

17.1 

16.2 

IOO.O 

1860 

44.0 

4-2 

15-3 

10.3 

14-5 

IOO.O 

1861 

53-2 

4-5 

11.4 

6.8 

IO.O 

IOO.O 

1862 

48.2 

5-8 

9-9 

7-5 

13.8 

IOO.O 

1863 

41-5 

6.9 

11.9 

72. 

19.0 

1864 

39-8 

6.9 

13-4 

IO.O 

18.0 

IOO.O 

1865 

38.8 

4-8 

17-3 

IO.O 

18.0 

IOO.O 

1866 

43-1 

5-2 

14-3 

13.1 

16.5 

IOO.O 

1867 

40.9 

5-1 

7-9 

n.3 

18.2 

IOO.O 

1868 

35-3 

6.3 

16.4 

15-2 

20.3 

IOO.O 

1869 

29-3 

6.1 

15-7 

16.8 

21.9 

IOO.O 

1870 

30.6 

5-9 

15-2 

14.9 

2I.O 

IOO.O 

395]  TRAFFIC,  1857-1870  111 

ness  was  necessarily  confined  to  shipments  of  merchandise  and 
small  quantities  of  miscellaneous  articles.  After  the  lease  of  the 
Dubuque  and  Sioux  City  the  company  had  only  one  valuable 
traffic  connection  over  which  freight  was  sent  on  through  bill- 
ing— the  St.  Louis,  Alton  and  Terre  Haute,  which  included  the 
Belleville  and  Southern  Illinois,  which  crossed  the  lines  of  the 
Illinois  Central  at  Pana,  Mattoon,  and  Du  Quoin.  By  means  of 
this  system  through  trains  were  run  from  St.  Louis  to  Chicago, 
via  Mattoon,  and  to  Cairo,  via  Du  Quoin.  The  line  from  Chicago 
to  St.  Louis  handled  a  large  share  of  the  freight  between  those 
two  cities  and  on  the  whole  was  very  important.  At  the  same 
time,  the  tonnage  routed  over  this  connection  was  only  a  small 
fraction  of  the  total  traffic  of  the  system. 

While  local  freight,  in  the  technical  meaning  of  the  word, 
was  much  more  important  than  through  business,  local  traffic, 
in  the  common  usage,  referring  to  freight  handled  between  local 
stations,  was  unimportant.  Grain,  lumber,  merchandise,  and  live 
stock,  the  leading  articles  forwarded  or  received,  originated  at 
or  were  destined  to  the  three  main  termini  of  the  road,  Chicago, 
Dunleith  or  Dubuque,  and  Cairo.  Shipments  between  local  sta- 
tions were  confined  to  coal,  certain  kinds  of  merchandise,  and  a 
few  miscellaneous  goods.  At  the  most,  less  than  thirty  per  cent 
of  all  the  traffic  on  the  road  was  carried  between  local  stations. 

As  indicated  in  the  previous  pages  the  bulk  of  the  traffic  was 
seasonal,  that  is,  most  of  the  shipments  were  made  in  a  few 
months  of  the  year.  In  the  fall  grain  was  shipped  north  to  Chi- 
cago and  during  the  remainder  of  the  year  this  kind  of  traffic 
was  not  of  great  importance.  The  same  condition  existed  in  the 
handling  of  coal,  live  stock,  and,  to  a  less  extent,  lumber.  More- 
over, the  preponderance  of  agricultural  shipments  over  merchan- 
dise and  lumber  meant  that  the  inbound  tonnage  at  Chicago  and 
Cairo  greatly  exceeded  the  outbound.104  Furthermore,  except 
during  the  Civil  War  period,  the  bulk  of  the  agricultural  ship- 
ments were  forwarded  to  Chicago,  while  the  receipts  at  Cairo 
were  slight.105  However,  the  northbound  and  southbound  traffic 
during  the  period  from  1858  to  1870,  inclusively,  taken  as  a 
whole,  was  evenly  balanced.106 

The  large  increase  in  traffic  which  commenced  with  1860 
was  brought  about  by  the  general  development  of  the  country, 

10*Annual  Report,  Illinois  Central  Railroad,  1855-1870. 


112  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [396 

and  not  by  any  marked  reduction  of  rates.  The  tariffs  on 
through  freight  were  considerably  lower  in  1870,  but,  as  stated 
above,  local  rates  were  higher  during  the  latter  year  than  when 
the  railroad  was  put  in  operation.107.  However,  the  rates  seem 
to  have  been  as  low  as  was  necessary  to  move  the  traffic.  Lower 
charges  on  certain  articles  such  as  coal  and  possibly  lumber 
might  have  increased  the  tonnage  turned  over  to  the  railroad,  but 
it  is  almost  certain  that  a  reduction  on  the  tariffs  for  grain  and 
live  stock  would  not  have  attracted  a  much  larger  traffic.  As  it 
was,  the  territory  immediately  adjacent  to  the  Illinois  Central 
increased  its  production  of  agricultural  products  at  a  much  faster 
rate  than  the  state  as  a  whole  and  it  is  difficult  to  see  how  the 
country  could  have  grown  much  faster  than  it  did.  In  the  few 
years  immediately  after  the  war,  conditions  were  somewhat 
different,  but  the  statements  made  above  still  hold  good  for  that 
period. 

Thus,  it  is  safe  to  say  that  the  Illinois  Central  Eailroad,  so 
far  as  freight  traffic  was  concerned,  fulfilled  the  object  for  which 
it  was  built.  Compared  with  the  results  accomplished  by  other 
railroads  in  the  central  West,  the  achievements  of  the  Illinois 
Central  were  as  satisfactory  as  could  reasonably  have  been  de- 
manded. The  territory  tributary  to  it  made  gigantic  strides  in 
agriculture,  stock  raising,  mining,  and  manufacturing.  The 
country  was  well  settled  and  the  population,  as  a  whole,  was 
prosperous  and  contented.108 

In  the  first  few  years  in  which  the  railroad  was  in  operation 
the  passenger  business  was  of  more  importance  than  the  trans- 
portation of  freight.  Before  the  war  there  was  a  large  immi- 
gration into  all  parts  of  Illinois  and  a  large  proportion  of  these 
settlers  used  the  Illinois  Central  railroad.  Other  reasons  induced 
a  large  passenger  traffic  and  during  1856  and  1857  there  was  a 
larger  number  of  passengers  carried  on  the  railroad  than  in  the 
years  immediately  following  the  war.  The  Civil  War  also  had 
an  important  influence  on  travel  over  the  railroad  through  the 

107Cf.  Chap.  vi. 

108These  remarks  do  not  apply  to  the  years  after  1868.  After  the  war 
there  were  important  changes  in  economic  conditions  in  the  central  west. 
It  became  less  and  less  profitable  for  the  farmers  to  ship  grain  and  the 
agriculture  communities  suffered  severely.  This  dissatisfaction  led  to  the 
Granger  agitation  of  the  early  Seventies.  However,  these  influences  had 
just  begun  to  affect  central  Illinois  and  the  results  were  not  sufficient  to 
change  the  statement  made  in  the  text. 


397]  TRAFFIC,  1857-1870  113 

transportation  of  troops  and  the  movement  of  persons  to  and 
from  the  armies  south  of  Cairo.  With  the  removal  of  the  tem- 
porary stimuli  to  pasesnger  traffic  this  part  of  the  railroad's 
business  became  of  less  relative  importance  than  in  the  period 
from  1855  to  1865.109 

The  large  traffic  during  the  construction  of  the  road  and 
the  Civil  War  was  accompanied  by  extremely  low  rates.  In 
order  to  induce  settlers  to  come  to  Illinois  and  to  develop  the  re- 
sources of  the  state  the  tariffs  from  1856  to  1860  were  very  low. 
In  1857,  the  year  of  greatest  travel,  the  average  rate  per  passen- 
ger was  only  two  cents  a  mile.  Local  tariffs  were  placed  at  four 
cents  a  mile,  but  most  of  the  people  using  the  road  travelled  for 
much  less,  and  the  charges  for  immigrant  and  excursion  traffic 
were  considerably  below  the  average.  During  the  war  large 
numbers  of  troops  were  carried  at  approximately  half  rates  and 
this  made  the  charges  appear  lower  than  they  really  were.  After 
1865  conditions  were  normal  and  the  local  fare  of  four  cents  a 
mile  seems  to  have  been  the  universal  charge. 

The  bulk  of  the  passenger  business,  as  of  the  freight,  was 
local,  but  the  proportion  of  through  to  local  was  much  greater, 
as  the  number  of  passenger  connections  was  larger  than  the  num- 
ber of  freight  connections.  In  1860  fourteen  railroads,  besides 
those  at  Chicago,  connected  the  Illinois  Central  with  points  east 
or  west,  and  this  number  had  increased  to  twenty  ten  years  later. 
The  most  valuable  of  these  connections  were  the  eastern  lines  at 
Chicago;  the  Toledo,  Peoria,  and  Western  at  El  Paso  and  Oil- 
man ;  the  Toledo,  Wabash,  and  Western  at  Decatur  and  Tolono ; 
the  St.  Louis,  Vandalia  and  Terre  Haute  and  the  Terre  Haute 
and  Indianapolis  at  Vandalia  and  Effingham;  the  Chicago  and 
Northwestern  at  Freeport;  the  Chicago,  Burlington,  and  Quincy 
at  Mendota ;  and  the  Ohio  and  Mississippi  at  Odin  and  Sandoval. 
Taking  the  through  passenger  business  as  a  whole  the  Illinois 
Central  received  about  as  many  persons  from  other  lines  as  it 
turned  over  to  them,  and  the  business  was  quite  profitable.110 

109 Annual  Report,  Illinois  Central  Railroad,  1855-1870. 

ll°Ibid.    The  number  of  persons  received  from  and  delivered  to  efich 

of  the  connections  of  the  railroad  is  given  in  the  annual  reports.     The 
summarized  totals  are  as  follows : 

1860  1870 

Received                                                   66,127  95,046 

Delivered                                                  73,686  102,286 


114  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [398 

Although  the  Illinois  Central  Railroad  was  built  to  fit  into 
economic  conditions  in  the  upper  Mississippi  valley  in  which 
the  important  lines  of  trade  were  north  and  south,  not  east  and 
west,  it  adapted  itself,  in  the  years  from  1856  to  1870,  to  an  east 
and  west  movement  of  western  produce.  Had  the  original  plans 
of  its  promoters  been  carried  out  to  their  full  extent,  the  Illinois 
Central  would,  probably,  have  built  up  the  territory  dependent 
on  it  to  an  even  greater  extent  than  it  did.  At  the  same  time 
the  profits  to  its  owners  and  promoters  would  have  been  greater. 
As  it  was,  economic  conditions  in  the  central  "West  and  upper 
Mississippi  valley  were  such  that  the  peculiar  location  of  the 
railroad  did  not  interfere  with  its  usefulness.  The  Illinois  Cen- 
tral was  more  influential  than  some  of  the  distinctly  east  and 
west  roads,  such  as  the  Northwestern  or  Rock  Island,  in  building 
up  the  commercial  interests  of  Chicago.  Thus,  the  traffic  his- 
tory of  this  railroad  from  1856  to  1870  presents  the  curious  in- 
stance of  a  road  built  to  develop  one  line  of  commerce,  in  the 
particular  case,  trade  along  north  and  south  lines,  actually  doing 
more  than  any  other  company  to  build  up  trade  on  a  competitive 
route. 

Much  of  this  success  was  due  to  an  unusually  fortunate 
combination  of  circumstances.  The  favorable  location  of  the 
railroad,  making  it  tributary  both  to  the  Great  Lakes  and  to  the 
Mississippi  River;  the  phenomenal  industrial  development  of 
the  United  States  and  of  England,  together  with  a  considerable 
increase  in  the  price  of  farm  products ;  the  exploitation  of  a  rich 
and  virgin  agricultural  territory  at  a  time  when  the  revolution 
in  farming  practice  of  the  middle  of  the  19th  century  tremen- 
dously stimulated  grain  production ;  and  the  absence  of  all  com- 
petition— in  fact,  practically  every  railroad  touching  the  Illinois 
Central  Railroad  was  tributary  to  it — all  of  these  factors  com- 
bined to  make  the  period  from  1861  to  1870  the  most  prosperous 
one  in  the  history  of  the  railroad. 

However,  most  of  these  favorable  influences  were  temporary 
in  their  effect.  The  agricultural  resources  of  Illinois  were  lim- 
ited and  after  1870  most  of  the  causes  which  had  worked  for 
the  prosperity  of  the  road  before  that  time  were  to  work  for  its 
impoverishment  for  several  years  afterward.  The  most  impor- 
tant single  influence,  and  one  which  was  becoming  influential 
even  before  1870,  was  the  extension  of  the  trunk  lines,  i.e. 
Wabash,  Pennsylvania,  New  York  Central,  Baltimore  and  Ohio, 
and  Erie  railroads,  with  their  connections,  directly  into  the 
territory  of  the  Illinois  Central  Railroad.  With  these  extensions 


399]  TRAFFIC,  1857-1870  115 

there  followed  a  period  of  radical  rate  reductions  which  made  it 
possible  for  these  roads  to  divert  grain  from  central  Illinois 
directly  east  over  their  own  rails,  thus  eliminating  Chicago  as 
a  terminal  for  this  territory  and  giving  the  Illinois  Central  Kail- 
road  only  a  short  haul  to  junction  points.  While  these  events 
belong  to  the  period  after  1870  their  influence  commenced  soon 
after  the  Civil  War  and  made  clear  to  careful  observers  even 
then  the  temporary  nature  of  the  railroad's  prosperity  during 
this  period. 

On  the  whole,  however,  notwithstanding  these  accidental 
influences,  the  period  from  1857  to  1870  was  one  of  solid  traffic 
development.  Central  Illinois  was  settled;  a  prosperous  agri- 
cultural population  was  made  tributary  to  the  railroad; 
numerous  towns  and  cities  were  established ;  industries  in  these 
places  and  at  Chicago  were  well  under  way;  a  number  of  coal 
mines  had  been  opened  and  the  coal  introduced  both  for  domestic 
and  industrial  purposes.  These  results  constituted  the  outward 
achievements  of  the  company.  Supplementing  them  was  the 
internal  development  of  the  railroad  in  the  way  of  traffic 
organization  and  connections,  the  establishment  of  policies,  and 
the  perfection  of  the  machinery  of  operation  and  management. 
Most  important  of  all  was  the  fact  that  the  Illinois  Central 
Railroad  had  built  itself  firmly  into  the  very  center  of  the 
economic  organization  of  Illinois.  Other  systems  might  be 
stronger  or  larger,  but  no  system  has  ever  been  able  to  supplant 
the  "Central"  in  its  hold  on  the  industries  of  the  state.  What 
the  Pennsylvania  Railroad  is  to  Pennsylvania,  the  New  Haven 
to  southern  New  England,  and  the  Southern  Pacific  to  Cali- 
fornia, that,  though  perhaps  to  a  slightly  less  extent,  the  Illinois 
Central  Railroad  is  to  Illinois.  Whatever  else  was  won  or  lost 
during  the  period  to  1870,  the  fact  remains  that  during  this 
time  solid  foundations  were  laid  for  the  industries  of  central 
Illinois  as  well  as  for  the  traffic  of  the  company.  These  results, 
moreover,  were  secured  by  a  service  more  valuable  than  that 
rendered  by  any  other  railroad  of  the  period.  Thus,  in  1870, 
the  Illinois  Central  Railroad  was  established  as  the  keystone  in 
the  economic  organization  of  Illinois;  for  that  purpose  it  was 
planned;  for  that  purpose  it  was  constructed;  and  the  years 
from  1857  to  1870  were  the  years  during  which  that  purpose 
was  fulfilled. 


CHAPTER  VI. 

FINANCES  OP  CONSTRUCTION  AND  OPERATION,  1851  TO  1870. 

As  already  indicated,  financial  difficulties  connected  with 
building  a  railroad  through  the  center  of  Illinois  prevented  its 
construction  before  1850.  Three  successive  private  companies 
and  the  state  itself  failed  to  secure  the  financial  support  neces- 
sary to  complete  the  enterprise  and  it  must  have  been  with  many 
misgivings  that  Robert  Schuyler  and  his  associates  assumed  re- 
sponsibility for  this  previously  illfated  project. 

Before  1851,  the  fiscal  operations  connected  with  the  road 
were  neglected.  As  far  as  can  be  found  from  the  records  of  the 
Cairo  City  and  Canal  Company  and  of  the  state  of  Illinois,  no 
definite  estimates  of  cost  of  construction  were  ever  made.  In 
the  Internal  Improvement  Act  of  1837  a  gross  appropriation 
of  $3,500,000,  only  $10,000  per  mile,  was  made,  and  the  Cairo 
companies  evidenty  regarded  this  sum  as  sufficient.1.  Thus,  one 
of  the  first  duties  of  the  promoters  of  the  new  company  was  to 
secure  an  approximate  statement  of  the  cost  of  the  railroad.  To 
make  a  regular  survey  was  too  expensive,  and,  as  a  substitute, 
Mr.  Rantoul,  late  in  1850,  through  certain  friends  in  the  East, 
secured  the  cost  of  the  Alton  and  Sangamon  and  seven  leading 
eastern  railroads.  Upon  these  figures  he  prepared  a  prelimi- 
nary estimate,  which  became  the  basis  of  the  fiscal  program  of 
the  memorialists.  According  to  this  statement,  the  total  cost 
would  vary  from  $14,950,000  ($23,000  per  mile)  to  $32,078,843 
($41,681.81  per  mile),  depending  upon  length  of  line  and  char- 
acter of  construction.2 

In  financing  the  enterprise  the  promoters  had  three  methods 
open  to  them.  The  one  most  common  at  that  time,  especially  in 
the  East  and  South,  was  to  sell  sufficient  stock  to  provide  for 

1Session  Laws  of  Illinois,  1836-1837,  p.  121 ;  cf .  Chap,  n ;  also  records 
of  the  various  Cairo  companies  in  the  office  of  the  Cairo  Title  and  Trust 
Company,  Cairo,  111. 

Illinois  State  Journal  (Springfield),  February  12,  1851.  The  estimate 
was  forwarded  to  Representative  U.  F.  Lender. 

116 


401]  FINANCES,  1851-1870  117 

most  of  the  expenditures,  this  being  supplemented,  if  necessary, 
by  the  issue  of  mortgage  or  income  bonds.  The  second  and  less 
conservative  method,  nevertheless  rapidly  growing  in  favor,  was 
to  build  the  railroad  by  selling  mortgage  bqnds,  usually  at  a 
heavy  sacrifice,  and  distribute  the  stock  as  a  bonus  to  the  pro- 
moters.3 With  the  Illinois  Central  there  was  a  third  possibility. 
The  company  had  a  federal  land  grant  of  from  two  and  a  half  to 
three  million  acres  of  farming  land  and  this  allowed  the  company 
to  pursue  a  policy  entirely  different  from  what  would  otherwise 
have  been  possible. 

To  the  eastern  capitalists  the  land  grant  was  considered  the 
most  valuable  part  of  the  undertaking,  and  a  few  years  later 
Mr.  Richard  Cobden  expressed  the  opinion  of  these  men  very 
clearly  when  he  said  "It  is  not  as  a  railroad  investment  that  I 
regard  so  favorably  this  undertaking,  but  its  value  in  my  eyes 
depends  on  the  landed  estate.  .  .  ."*  However,  the  value 
of  even  three  million  acres  of  rich  prairie  land,  hundreds  of  miles 
from  good  transportation,  was  not  great.  Between  every  section 
of  railroad  land  the  federal  government  held  another  section, 
equally  fertile,  which  it  was  willing  to  sell  as  low  as  two  dollars 
and  a  half  an  acre.  Six  miles  back  from  the  tracks  lay  a  vast, 
practically  unoccupied  stretch  of  government  land,  the  maximum 
price  for  which  was  a  dollar  and  a  quarter  an  acre.  At  imme- 
diate sale,  this  enormous  domain  belonging  to  the  "Central" 
would  not  yield  over  eight  or  ten  millions  of  dollars,  less  than  half 
the  total  cost  of  the  railroad,  and  to  supply  the  remaining  mil- 
lions themselves  was  not  an  inviting  prospect  to  the  promoters.  To 
avoid  this  difficulty  the  directors  adopted  a  plan  by  which  the 
grant  could  be  held  until  a  large  return  would  be  received  and 
yet  the  land  remain  the  basis  of  all  fiscal  operations. 

This  policy  was  worked  out  in  detail  in  the  report  made  by 
President  Schuyler  to  the  board  on  April  23rd,  1851,  the  main 
features  of  which  are  as  follows.  The  land  grant  was  to  be 
the  basis  of  all  financial  operations,  but  to  secure  money  for  im- 
mediate expenditures,  mortgage  bonds  would  be  issued.  (1) 
All  the  railroad  track,  right  of  way,  stations,  etc.,  and  two 
million  acres  of  land,  were  to  be  mortgaged  to  the  extent  of 
$21,400,000,  which  was  then  considered  the  approximate  cost  of 

3Cf.  Thompson,  Cost  and  Capitalization  of  American  Railroads. 

4Mss.  letter  from  Richard  Cobden  to  Sir  Joshua  Walmsley,  written 
from  Midhurst,  England,  September  18,  1857.  Original  in  office  of  the 
President,  Illinois  Central  Railroad. 


118  HISTORY    OF   ILLINOIS   CENTRAL   RAILROAD  [402 

construction.5  These  two  million  acres  would  be  held  for  ten  or 
fifteen  years,  and  then  sold  at  such  prices  that  the  cash  realized 
would  equal  the  total  amount  of  bonds  issued.  The  entire  issue 
would  be  retired  not  later  than  the  year  1875.  (2)  Two  hun- 
dred and  fifty  thousand  acres  were  set  apart  as  a  guarantee  of 
interest  on  the  mortgage  bonds  and  could  be  sold  at  the  discre- 
tion of  the  directors.  (3)  The  remainder  of  the  land  amount- 
ing to  something  between  one  quarter  and  three  quarters  of  a 
million  acres,  according  to  the  exact  route  selected,  was  to  be  free 
land,  that  is  available  for  any  contingency.  (4)  The  stock, 
equal  in  amount  to  the  cash  expenditures,  was  to  be  distributed 
as  a  bonus  to  purchasers  of  bonds,  promoters,  directors,  or  sold 
to  outside  parties,  a  moderate  payment  of  $5  to  $10  per  share 
being  made  to  meet  incidental  and  extraordinary  expenses.6 

Thus,  in  return  for  an  investment  of  a  million  or  two  dol- 
lars, the  stockholders  were  to  receive,  free  of  debt  by  1875,  a 
first  class  trunk  line,  seven  hundred  miles  in  length,  and  five 
or  six  hundred  thousand  acres  of  rich  Illinois  prairie  land,  worth 
altogether  eighteen  to  twenty  million  dollars.  It  was  a  business- 
like proposition  to  secure  to  the  promoters  of  the  Illinois  Central 
the  greatest  profits  ever  realized  to  that  time  by  a  group  of 
American  capitalists.  Had  it  not  been  for  a  serious  underesti- 
mate of  the  cost  of  construction  by  Colonel  Mason ;  the  panic  of 
1857 ;  and  the  Civil  War — events  entirely  unforseen  in  1851 — 
these  prospects  would  undoubtedly  have  been  realized. 

President  Schuyler's  plan  of  April  23rd  was  based  on  Ran- 
toul's  statement,  and  definite  action  was  necessarily  deferred 
until  Colonel  Mason  submitted  his  preliminary  estimate  in  Sep- 
tember, 1851.  According  to  his  report,  the  railroad  would  be 
699  miles  in  length  and  for  that  distance  the  cost  of  roadway, 
buildings,  equipment,  and  incidentals  was  placed  at  $16,537,212, 
or  $23,600  per  mile,  as  against  $21,400,000  allowed  by  Rantoul.7 

'The  lands  were  divided  as  follows : — 

400,000  acres  inferior  agricultural  land  at  $  6  acre  $  2,400,000 

1,200,000     "  "    "      10      "      12,000,000 

300,000     "      superior  "    "     15      "       4,500,000 

100,000     "      especially  valuable        "    "     25      "       2,500,000 


TOTAL  $2 1 ,400,000 

"Letter  of  Robert  Schuyler  to  Board  of  Directors,  April  23,  1851,  in 

Documents  Relating  to  the  Organization  of  the  Illinois  Central  Railroad; 

cf.  mortgage  of  September  13,  1851,  in  same  pamphlet. 

7Report  of  President  Schuyler  to  Board  of  Directors,  September  12, 

1851. 


403]  FINANCES,  1851-1870  119 

The  schedules  were  prepared  with  great  care  and  represented  a 
reliable  estimate  of  the  cost  according  to  prices  current  in  the 
summer  of  1851.  At  the  same  time,  either  through  errors  in 
the  surveys,  wrong  estimates  of  bridge  work,  grading,  and  build- 
ings, or  else  through  a  desire  to  present  to  the  outside  world  as 
favorable  a  showing  as  possible,  the  report  greatly  underesti- 
mated the  cost  of  construction.  The  seriousness  of  this  error  is 
shown  by  a  difference  of  $10,030,805.61  between  the  estimate  of 
September,  1851,  and  the  actual  cost  to  December  31st,  1857 .8 
For  an  engineer  of  Mason's  standing  this  difference  of  60.5% 
was  inexcusable,  and  many  subsequent  financial  difficulties  were 
caused  by  this  mistake. 

With  the  estimated  cost  of  construction  decreased  from  $21,- 
400,000  to  $16,500,000,  the  directors  deemed  it  wise  to  decrease 
the  amount  of  money  to  be  borrowed  to  $17,000,000.  Accord- 
ingly, on  September  13,  1851,  the  Illinois  Central  Railroad  Com- 
pany mortgaged  its  right  of  way,  track,  buildings,  and  two  mil- 
lion acres  of  land,  but  not  the  rolling  stock  or  remaining  five 
hundred  thousand  acres  of  land,  as  security  for  $13,000,000  seven 
per  cent,  and  $4,000,000  six  per  cent,  coupon  bonds,  due  in  1875, 
with  interest  payable  semi-annually  in  gold.  The  main  fea- 
tures of  the  mortgage  were  the  same  as  outlined  in  the  president 's 
report  of  April  23,  1851,  with  the  exception  of  the  size  of  the 
mortgage.9  Three  trustees  were  appointed  to  handle  matters 
relating  to  the  mortgage.  Two  of  these  were  appointed  by  the 
Governor  of  Illinois  and  the  third  by  the  company.10 

In  the  charter  the  amount  of  capital  stock  was  fixed  at  one 
million  dollars  and  could  be  ''increased  ...  to  any  sum  not 
exceeding  the  entire  amount  expended  on  account  of  said  road. ' ni 

No  restriction,  other  than  the  above,  was  placed  on  the  issu- 
ing of  stock,  and  the  directors  had  entire  power  to  fix  the  terms 
of  sale.  Accordingly,  in  line  with  the  letter,  and  perhaps  with 
the  spirit,  of  the  charter,  the  directors  determined  to  keep  the 
stock  at  an  amount  equal  to  the  total  cost  of  the  railroad,  irre- 

8Construction  expenditures  to  December  31,  1857,      $26,568,017.61 
Estimate  of  September  12,  1851,  16,537,212.00 


DIFFERENCE  $10,030,805.61 

9Mortgage  of  September  13,  1851.  Documents  Relating  to  the  Organi- 
sation of  the  Illinois  Central  Railroad. 

10John  C.  Moore  and  Samuel  C.  Lockwood  were  appointed  by  Gov- 
ernor French,  and  Morris  Ketchum  represented  the  railroad. 

"Act  of  February  10,  1851  (Illinois  Central  Charter),  sec.  4. 


120  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [404 

spective  of  the  cash  paid  in  by  the  shareholders.  Originally  this 
amount  was  fixed  at  $17,000,000,  but  later  was  increased  to  $25,- 
500, OOO.12  Under  the  president's  plan,  the  bonds,  and  ultimately 
the  land  grant,  were  intended  to  provide  funds  for  construction, 
and  the  stock  was  to  be  assessed  only  a  nominal  amount,  say 
$10  to  $20  per  share.13 

The  charter  provided  that  $200,000  should  be  deposited  with 
the  state  treasurer  as  a  guarantee  of  good  faith  and  that  $20  per 
share  should  be  paid  on  the  first  one  million  of  stock.  Immedi- 
ately after  the  company  was  organized  one  million  dollars  was 
subscribed  by  the  incorporators  and  $50,000,  or  $5  per  share, 
paid  in  to  provide  for  the  various  expenses  of  organization.14 
Shortly  afterwards  this  first  assessment  was  increased  to  $20  per 
share  and  another  million  dollars  subscribed.  A  payment  of 
$10  per  share  was  asked  on  the  second  issue.  This  gave  a  total 
of  $300,000  received  from  the  first  two  issues  of  stock  ($200,000 
from  the  first  issue  and  $100,000  from  the  second).  As  a  guar- 
antee that  the  road  would  be  built  two  hundred  thousand  dollars 
was  deposited1  with  the  banking  firm  of  Ketchum,  Rogers,  and 
Bement  and  with  Mr.  John  Griswold,  of  New  York,  subject  to 
the  order  of  the  state  of  Illinois.15 

The  receipts  from  the  sale  of  the  first  two  million  of  stock 
paid  the  expenses  of  organization,  but  by  winter  it  became  neces- 
sary to  secure  adequate  funds  for  construction,  and,  in  accord- 
ance with  President  Schuyler's  plan,  mortgage  bonds  were 
issued.  In  1851,  after  several  years  of  depression,  the  country 
entered  upon  a  period  of  great  financial  prosperity  during  which 
there  was  a  heavy  demand  in  the  United  States  and  Europe  for 
good  investment  securities  and  the  directors  of  the  Illinois  Cen- 
tral were  able  to  take  immediate  advantage  of  the  favorable 
financial  situation. 

12Chicago  Daily  Democrat,  August  17,  1853;  also  Annual  Report,  Illi- 
nois Central  Railroad,  1855,  1870. 

13Report  of  President  Schuyler,  September  12,  April  23,  1851. 

^Chicago  Daily  Democrat,  August  17,  1853. 

15At  this  time  Mr.  Moore  was  severely  criticized  for  depositing  the 
money  with  men  connected  with  the  Illinois  Central,  but  there  is  no  ground 
for  believing  that  he  was  influenced  by  other  than  business  motives. 
Messrs.  Griswold,  Ketchum,  Rogers,  and  Bement  paid  the  state  interest 
at  five  per  cent  and  gave  as  security  additional  certificates  of  deposit  more 
than  covering  the  money  borrowed.  See  letter  of  John  Moore,  dated 
Springfield,  January  24,  1852,  quoted  in  Chicago  Daily  Democrat,  February 
6,  1852. 


405]  FINANCES,  1851-1870  121 

According  to  newspaper  reports,  one  banking  firm  had 
already  agreed  to  take  the  entire  $17,000,000  at  par  or  over, 
when  a  slight  stock  market  flurry  occurred,  preventing  comple- 
tion of  the  arrangements.16  Probably  the  real  reason  was  that 
investors  hesitated  to  advance  such  a  large  amount  before  a 
shovelful  of  earth  had  been  removed.17  This  made  it  necessary 
to  reduce  the  issue  to  four  or  five  millions,  and  numerous  offers 
were  made  for  the  smaller  amount,  including,  it  is  said,  a  very 
flattering  proposition  from  the  Rothschilds.18  The  success  of 
the  smaller  loan  was  immediate.  By  December,  1851,  bankers 
in  New  York,  Boston,  and  Philadelphia  had  promised  to  take 
$4,000,000  seven  per  cent  bonds  at  par,  and  in  February,  1852, 
the  negotiations  were  completed.19  The  sale  at  once  placed  the 
credit  of  the  Illinois  Central  on  a  sound  basis,  and  showed  that 
it  could  borrow  money  on  as  good  terms  as  well  established  roads 
like  the  Hudson  River  and  the  New  York  and  New  Haven  rail- 
roads. It  also  enabled  the  company  to  pay  cash  for  all  construc- 
tion work.20  The  success  of  the  undertaking  was  thus  assured. 

Even  before  the  mortgage  had  been  signed,  plans  were  made 
to  place  part  of  the  loan  in  Great  Britain,  and  in  August,  1851, 
ex-secretary  of  the  treasury  Robert  J.  Walker  and  vice-president 
David  A.  Neal  were  appointed  as  agents  to  visit  Europe.  They 
reached  London  in  November  and  before  selling  any  bonds  they 
spent  several  months  disseminating  information  in  regard  to  the 
"Central";  consulting  bankers,  brokers,  and  investors;  and 
making  arrangements  with  manufacturers  of  railroad  materials.21 
The  results  were  entirely  satisfactory.  Before  the  formal  an- 
nouncement on  June  12th,  1852,  a  large  number  of  investors  and 
manufacturers  had  promised  to  take  bonds,  and  within  a  few 
weeks  after  the  bids  were  asked  for,  the  entire  amount  was  dis- 
posed of  at  a  small  premium.22  The  strength  of  the  company's 
credit  was  illustrated  in  a  striking  way  when  a  number  of  large 
rail  makers  took  bonds  rather  than  cash  in  payment  of  materials 
purchased.  It  was  also  emphasized  by  the  fact  that  the  whole 

^Chicago  Daily  Democrat,  November  5,  1851. 

"See  editorials  in  American  Railway  Journal,  December,  1851.  Mr. 
Poor  was  editor  of  the  Journal  and  my  conclusions  are  based  very  largely 
on  his  editorials. 

^Chicago  Daily  Democrat,  November  5,  December  15,  1851. 

™Ibid.,  February  16,  1852. 

20Ibid.,  February  15,  1852. 

^Ibid.,  September  8,  1851. 

22Railway  Times  (editorial),  June  12,  1852;  ibid.,  advertisement. 


122  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [406 

loan  of  £1,000,000  sterling,  or  five  millions  of  dollars,  although 
most  of  it23  was  bearing  only  six  per  cent  interest  —  one  per  cent 
less  than  the  New  York  issue  —  was  over  subscribed  at  a  small 
premium.2*  However,  the  British  purchasers  were  allowed  to 
subscribe  to  five  shares  of  stock  for  every  $1000  bond  and  as 
Illinois  stock,  subject  to  possible  assessments  of  $80  per  share, 
was  selling  at  or  near  par,  many  investors  bought  high  grade 
bonds  to  secure  such  valuable  stock.25  Thus,  by  August  1st, 
1852,  $9,000,000  of  six  and  seven  per  cent  bonds  had  been  sold 
at  par.26  On  the  other  hand,  the  shareholders  had  contributed 
only  $300,000. 

From  June,  1852,  to  June,  1853,  there  was  a  small  increase 
in  the  amount  of  stocks  and  bonds  outstanding.  No  new  bond 
issues  were  sold,  but  a  number  of  contractors  and  manufacturers 
agreed  to  take  bonds  instead  of  cash  in  settlement  of  contracts. 
Likewise,  subscriptions  from  contractors  and  manufacturers, 
stock  subscriptions  by  purchasers  of  six  per  cent  bonds,  and  pur- 
chases by  investors  generally  increased  the  amount  of  stock  out- 
standing.27 'Furthermore,  on  June  15th,  1853,  seven  per  cent 
bonds  to  the  amount  of  three  million  dollars  were  disposed  of  at 
par,  although  it  is  probable  that  nearly  all  of  this  loan  had  been 
unofficially  promised  several  months  prior  to  that  time.28  Thus, 
by  August  1st,  1853,  109,293  shares  of  stock  had  been  subscribed. 
Payments  from  $5  to  $20  per  share  were  made,  and  the  total 
amount  received  was  $746,465,  while  $13,086,000  of  bonds  had 
been  sold  or  contracted  for,  of  which  $6,195,117.66  had  been 
paid.29  All  of  the  bonds  had  been  disposed  of,  at  or  above  par, 
and,  including  differences  in  exchange  and  discount,  there  was  a 
premium  of  $84,014.27.  Miscellaneous  accounts,  principally  bills 
payable,  brought  the  total  cash  receipts  to  $7,840,525.68.  Con- 
struction and  general  office  expenses,  interest  charges,  and  the 
cost  of  organization  took  $6,558,216.45,  leaving  a  nominal  bal- 

23Of  the  $5,000,000,  $1,000,000  bore  seven  per  cent  interest,  and  the 
remainder,  $4,000,000,  bore  six  per  cent. 

24Amertcan  Railway  Journal,  May  14,  1853;  also  official  statement  of 
Daily  Democrat,  August  17,  1853. 

^Railway  Times,  June  12,  1852;  also  miscellaneous  editorials,  adver- 
tisements and  notices  during  July,  1852. 

2<sStatement  of  the  treasurer,  Chicago  Daily  Democrat,  August  17,  1853. 

27  Ibid.;  also  Railway  Times,  June  12,  1852. 


"Ibid. 


407]  FINANCES,  1851-1870  123 

ance  of  $1,382,309.23.    After  deducting  current  liabilities,  how- 
ever, this  was  reduced  to  $370,232.45.30 

This  is  a  favorable  report,  and  had  the  financial  situation 
remained  the  same  in  1854  as  in  1852  and  1853  there  would  have 
been  no  danger  from  the  small  cash  balance.  However,  these 
years  had  been  times  of  tremendous  expansion  in  all  lines  of  busi- 
ness and  the  demand  for  new  capital  was  so  great  that  it  was  soon 
impossible  to  borrow  on  anything  like  reasonable  terms.  When 
ten  per  cent  bonds  of  reputable  companies  such  as  the  Ohio  and 
Mississippi  were  selling  at  sixty  or  seventy,  it  was  out  of  the  ques- 
tion to  dispose  of  six  and  seven  per  cent  Illinois  Central  bonds 
at  par.  The  money  market  was  also  affected  by  the  outbreak  of 
the  Crimean  war  which  created  large  additional  demands  for 
money,  especially  in  England  and  prevented  free  investment 
in  industrial  and  railroad  securities.  By  the  middle  of  October, 
1853,  the  six  per  cent  bonds,  which  only  a  few  months  before 
had  been  eagerly  sought  for  at  a  premium,  were  selling  for  95,31 
and  by  the  last  of  April  a  further  drop  of  fifteen  points  had 
taken  place.32  This  rapid  decline  was  accentuated  by  the  actions 
of  President  Schuyler.  He  was  president  of  the  New  York  and 
New  Haven  Railroad,  as  well  as  of  the  Illinois  Central,  and  in  the 
name  of  the  former  company  he  had  fraudulently  issued  a  million 
of  stock,  selling  the  same  for  the  personal  profit  of  himself  and 
friends.  The  leading  railroad  magnate  of  his  time  and  a  promi- 
nent stock  exchange  broker,  his  defalcation  had  a  disastrous  influ- 
ence on  the  stock  market.  A  Wall  Street  panic  commenced  on  the 
24th  of  July,  the  day  his  embezzlement  became  known,  and 
securities  dropped  rapidly  in  price.33  The  effect  on  the  Illinois 
Central  was  especially  damaging.  Robert  Schuyler,  its  president, 
was  a  fugitive  in  Canada  and  Gouverneur  Morris,  one  of  the  lead- 
ing directors,  was  a  bankrupt.  The  stock  declined  over  forty 
points  in  a  few  days  and  seven  per  cent  bonds  became  a  drug  on 
the  market  at  63.34  With  its  treasury  depleted  and  payments  on 

30Statement  of  the  treasurer,  I.  C.  R.  R.,  Chicago  Daily  Democrat, 
August  17,  1853. 

31Railway  Times,  October  24,  1853. 

32Ibid.,  Feb.  4,  1854;  seven  per  cent  bonds  sold  at  Sil/2  to  81^;  ibid., 
July  22,  November  24,  1854. 

*3Railway  Times,  November  14,  1854;  editorial  references  in  each 
number  July  24  to  November  n,  1854;  cf.  New  York  and  Chicago  news- 
papers of  the  same  dates. 


124  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [408 

millions  of  dollars  worth  of  construction  work  due  within  the 
year,  the  situation  was  critical. 

Fortunately  at  this  time  Mr.  W.  H.  Osborn,  who,  more  than 
any  other  person  connected  with  the  road,  had  helped  to  place 
its  finances  on  the  substantial  basis  of  today,  assumed  complete 
control  of  the  financial  affairs  of  the  company.  Prom  August 
1st,  1853,  to  December  31st,  1857,  not  quite  four  and  a  half  years, 
a  total  of  $23,339,722.76  was  expended  on  construction  work  and 
interest  payments.  After  deducting  bills  and  accounts  payable, 
the  company,  at  the  commencement  of  this  period,  had  only 
$370,232.45  in  cash,  leaving  some  twenty-three  million  dollars  to 
be  raised  within  this  short  period.  Against  these  expenditures, 
the  company  had  potential  assets  to  the  extent  of  eight  millions 
in  the  form  of  unpaid  installments  on  bonds  already  subscribed. 
However,  a  large  proportion  had  been  taken  by  contractors  or 
manufacturers  in  payment  of  work  or  supplies,  and  when  the 
bonds  dropped  below  par  they  refused  to  accept  anything  but 
cash  in  settlement  of  their  contracts.  Thus,  less  than  six  million 
dollars  was  actually  received  in  cash  from  these  unpaid  instal- 
ments.35 At  the  same  time  rapid  increases  in  the  price  of  raw 
material  and  the  wages  of  laborers  forced  the  contractors  to  de- 
mand a  larger  compensation  for  work  already  commenced.  These 
demands  the  company  was  bound  to  respect,  in  order  to  prevent 
a  complete  demoralization  of  the  work  through  contractors  giving 
up  their  contracts.36  Under  the  circumstances  the  directors  were 
forced  to  sell  construction  bonds  at  a  discount.  The  charter  pro- 
hibited this,  but  by  the  act  of  February  27,  1854,  this  restriction 
was  removed.37  As  early  as  February,  1854,  the  company  sold 
bonds  at  a  small  discount,  and  in  spite  of  the  low  quotations  for 
Illinois  Central  securities  further  issues  were  sold  at  current 
market  rates,  sometimes  as  low  as  only  $600  per  bond.38  Thus, 
by  the  31st  of  December,  1857,  the  management  had  disposed  of 
approximately  four  and  a  half  millions  of  seven  per  cent  bonds 
at  65,  as  against  par  for  six  per  cent  issues  sold  in  1852  and 
1853.39  Including  instalments  on  loans  made  prior  to  1854,  i.e. 
the  four  and  five  million  loans  of  1852  and  the  three  million  loan 
of  1853,  the  company  realized  $9,192,784.38  in  cash  from  con- 

Z5Annual  Report,  Illinois  Central  Railroad,  1855-1857. 
^Railway  Times,  May  5,  1855   ( Satterthwaite's  Report). 
"Session  Laws  of  Illinois,  1853-1854,  February  27,  1854,  sees.  2,  3. 
^Rail-way  Times,  May  5,  1855. 


409]  FINANCES,  1851-1870  125 

struction  bonds  from  August  1st,  1853,  to  December  31st,  1857.*° 
For  the  four  and  a  half  million  sold  in  this  period  the  company 
received  only  $2,900,000,  or  $650  per  bond. 

By  selling  these  four  and  a  half  million  dollars  of  bonds  at 
65  instead  of  par,  the  company  decreased  its  receipts  by  approxi- 
mately sixteen  hundred  thousand  dollars,  while,  from  various 
causes,  cost  of  construction  was  increased  by  several  millions. 
To  meet  this  deficit  in  receipts  the  management  resorted  to  the 
three  hundred  thousand  acres  of  free  land  reserved  by  the 
mortgage  of  1851,  and  in  1855  an  additional  mortgage,  covering 
$3,000,000  seven  per  cent  Free  Land  bonds  of  1860,  was  placed  on 
the  railroad  and  on  the  free  lands.*1  The  change  that  had  come 
over  the  financial  position  of  the  Illinois  Central  is  strikingly 
illustrated  by  the  results  of  this  loan.  Only  $2,079,876.61,  or 
$694  per  bond,  were  received.  Including  the  discount,  this  was 
equivalent  to  about  fifteen  per  cent  for  the  five  years  the  bonds 
ran,  as  against  slightly  under  six  per  cent  for  the  London  loan 
of  1852.42 

Even  the  Free  Land  Loan  of  1853  was  not  sufficient  to  meet 
construction  expenditures  and  finally,  in  1856,  the  company  re- 
sorted to  what  was  virtually  a  debenture  note.  In  that  year  there 
was  issued  $900,000  of  eight  per  cent  optional  right  bonds,  pay- 
able at  any  time  after  1858.43  To  make  the  notes  more  inviting  to 
investors,  holders  of  these  securities  were  given  an  option  on  stock 
equal  to  the  face  value  of  the  bonds.44  This  issue  was  disposed  of 
at  a  higher  average  price  than  the  Free  Land  bonds,  as  it  realized 
$945  per  bond,  equivalent,  including  discount,  to  about  eleven 
per  cent  interest.45  However,  borrowing  money  on  short  time 
notes  at  eleven  per  cent  to  finance  a  partially  constructed  railway 
was  a  dangerous  as  well  as  expensive  piece  of  financiering. 

These  loans  did  not  provide  the  necessary  capital,  and  to 
tide  the  company  over  the  period  of  construction  floating  obli- 
gations in  the  form  of  bills  and  accounts  payable  were  allowed 

*°Annual  Report,  Illinois  Central  Railroad,  August  i,  1853,  1855-1857. 

«/Wrf.,  1855,  1856. 

*2Ibid.  The  interest  on  the  money  actually  received  ($694  per  bond 
at  7%)  was  10.1%.  In  addition,  the  company  had  to  pay  $1000  per  bond 
in  1860,  although  it  received  only  $694.  As  the  company  had  the  use  of 
the  money  for  between  five  and  six  years  this  was  equivalent  to  about 
five  per  cent  more,  making  a  total  of  fifteen  per  cent. 

*slbid.,  1856. 

"Ibid. 

"Ibid. 


126  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [410 

to  accumulate — a  makeshift  which  eventually  inflicted  great  mor- 
tification as  well  as  financial  loss  upon  the  company.  Accord- 
ingly, miscellaneous  obligations  were  increased  from  $812,076.78, 
on  August  1st,  1853,  to  $3,700,551  on  October  20th,  1857.  Against 
this  liability  the  company  carried  in  New  York  less  than  a  hun- 
dred thousand  dollars  in  cash  or  cash  assets.46 

While  pursuing  these  expensive,  though  perhaps  necessary, 
expedients  of  selling  bonds  and  notes  at  a  heavy  discount,  the 
company  continued  its  weak  policy  in  regard  to  assessments  on 
the  capital  stock.  Prior  to  1854,  calls  for  only  a  nominal  amount 
had  been  made  upon  the  stockholders,  and,  on  August  1,  1853, 
only  $746,465  had  been  paid,  an  average  of  $6.80  per  share.47 
In  1854  two  assessments  of  $10  and  $5  respectively  were  made48 
and  this  was  followed  the  next  year  by  two  small  calls  of  $5  per 
share  on  the  entire  capital.49  $1,000,000  of  new  stock  was  also 
sold  at  $25  per  share.  In  the  middle  of  1857  another  call  of  $10 
was  made,  but  only  partial  payments  were  made  during  the  sum- 
mer.50 By  December  31,  1855,  there  had  been  received  in  cash 
$2,571,050,  or  an  average  of  $19.93  on  the  $12,925,600  outstand- 
ing. The  next  year  this  was  increased  to  $3,558,615,51  or  $25.20 
per  share  on  $14,034,700. 

Two  additional  sources  were  utilized  during  the  period  from 
1853  to  1857,  viz.  net  receipts  from  operation  and  sales  of  interest 
and  free  lands.  Early  in  1853  short  portions  of  the  road  were 
put  in  operation,  and  the  net  receipts  began  to  constitute  an  ap- 
preciable amount.  From  1853  to  1855,  inclusive,  $1,281,305.02 
was  received  in  this  way.52  In  1856  cash  sales  of  free  and  interest 
lands  were  important,  the  combined  receipts  to  1857  being  as 
follows : 

Net  receipts  from  Operation $2,134,403.78 

Net  receipts  Free  &  Interest  Lds 1,148,049.22 


Total  net  receipts _. $3,282,453.00 

Interest  to  Dec.  31,  1857 _. 5,897,644.18 


Net  deficit _  $2,615,191.1853 

46Statement  of  the  treasurer,   August  i,   1853;   Annual  Report,  Illi- 
nois Central  Railroad,  1857;  Fisher  Report,  Railway  Times,  June  19,  1858. 

"Ibid. 

"Viz.  $10  on  90,000  shares;  $5  on  129,346  shares;  making  a  total  of 
$20  per  share. 

*9Annual  Report,  Illinois  Central  Railroad,  1855. 

50/&uf.,  1857. 

"/«</.,  1855,  1856. 
id.,  1855. 
rf.,  1855,  1857- 


411]  FINANCES,  1851-1870  127 

Thus  the  net  receipts  from  operation  and  land  sales  failed  to 
meet  the  interest  payments  in  this  period  by  two  million  six  hun- 
dred thousand  dollars  and  the  deficit  had  to  be  made  good  by 
assessments  on  the  stock  and  by  sale  of  bonds.  In  fact  it  was  not 
until  the  year  1861  that  receipts  from  free  lands  and  the  oper- 
ation of  the  railroad  paid  all  interest  charges.5* 

The  various  issues  of  short  term  notes  and  the  accumulation 
of  unpaid  bills  meant  that  from  1853  to  1857  the  directors  were 
forced  into  a  hand-to-mouth  financial  policy,  offset  to  only  a  par- 
tial degree  by  subscriptions  to  stock  or  sale  of  long  time  bonds. 
The  result  of  this  policy  is  shown  by  the  condition  of  the  treasury 
in  1857.  Over  three  million  dollars  of  bills  and  accounts  payable 
were  still  outstanding,  while  the  amount  of  cash,  actually  on  hand 
in  New  York  did  not  exceed  a  few  thousand  dollars.  The  com- 
pany had  a  large  amount  of  bills  and  accounts  receivable,  time 
loans  and  other  slow  assets,  and  uncollected  instalments  on  stock, 
but  these  assets  were  not  available  in  case  of  a  sudden  market 
stringency.55  Steps  had  been  taken  to  remove  these  difficulties, 
but  before  they  could  be  carried  out  there  occurred  the  panic  of 
1857.  The  directors  of  the  Illinois  Central  were  unprepared  for 
such  a  catastrophe ;  Mr.  Osborn  was  in  Europe  at  the  time.  Notes 
were  presented  for  payment;  the  funds  in  the  treasury  at  New 
York  were  very  low,  and  though  the  company  had  eleven  hundred 
thousand  dollars  to  its  credit  in  England  and  over  a  hundred 
thousand  more  in  Chicago,  it  was  impossible  to  draw  bills  of 
exchange  at  any  reasonable  discount.  For  the  first  and  only 
time  in  its  history  the  company  was  forced  to  suspend  payment ; 
the  creditors,  under  stress  of  general  financial  failure,  became 
urgent  for  their  money ;  and,  in  the  absence  of  the  President,  the 
Secretary  made  a  temporally  assignment  of  the  property  in  order 
to  prevent  seizure  of  valuable  assets  by  creditors.58 

On  his  return  to  this  country,  Mr.  Osborn  commenced  ener- 
getic measures  to  restore  the  property  to  the  stockholders.  Funds 
were  rushed  from  England ;  arrangements  were  made  with  cred- 
itors for  extension  of  notes ;  and  the  directors  used  their  personal 
credit  to  put  the  company  on  its  feet.  Mr.  Osborn,  himself,  en- 

5*Annual  Report,  Illinois  Central  Railroad,  1861. 

^American  Railway  Journal,  quoted  in  Railway  Times,  November  7, 
1857;  Annual  Report,  Illinois  Central  Railroad,  1856;  Fisher  Report,  Rail- 
way Times,  June  19,  1858. 


128  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [412 

dorsed  notes  to  the  extent  of  several  hundred  thousand  dollars.57 
Unpaid  assessments  were  immediately  collected;  a  call,  payable 
September  25th,  of  $10  per  share,  was  made ;  and  a  further  assess- 
ment of  $10  ordered  early  in  1858.58  In  the  emergency,  the  stock- 
holders supported  the  company  loyally,  and  made  prompt  pay- 
ment of  the  additional  calls,  often  at  great  personal  inconvenience. 
The  crisis  showed  the  danger  of  large  balances  of  unpaid  bills 
and  to  eliminate  this  evil  the  directors  issued  sufficient  short  term 
notes  to  pay  off  all  such  bills.  Previously,  they  had  found  that 
the  optional  right  bonds  had  been  very  successful,  and  the  $900,- 
000  outstanding  was  now  increased  to  $3,200,000.  Optional  rights 
on  83,000  shares  of  stock  were  to  expire  between  the  first  of  June 
and  the  first  of  July  and  this  formed  the  basis  of  the  loan.  The 
bonds  were  convertible  into  stock  prior  to  February  20th,  1860, 
on  the  basis  of  twenty  five  shares  of  stock  with  $40  paid  in,  for 
each  $1000  bond,  and  were  to  be  redeemed  on  or  before  the  20th 
of  February,  1868.59  Although  the  interest  rate  was  only  seven 
per  cent,  the  convertible  feature  was  so  attractive  that  something 
like  $2,558,000  were  subscribed  by  the  1st  of  May,  1858.60 

These  energetic  measures  accomplished  their  object,  and  by 
the  close  of  the  year  1858  the  company  was  again  on  a  sound 
financial  basis.  All  the  floating  debt  was  either  paid  or  otherwise 
provided  for  and  the  assignment  was  removed.  During  the  fif- 
teen months  from  October,  1857,  to  December  31st,  1858,  between 
seven  and  eight  million  dollars  were  paid  into  the  treasury  of  the 
company  in  cash  or  in  various  Illinois  Central  bonds  in  payment 
of  stock,  allowing  the  directors  to  retire  the  entire  floating  debt, 
with  the  exception  of  $396,167.53,  and  to  pay  all  construction  and 
interest  charges  in  full.61  ThuX  through  the  efforts  of  Mr.  Os- 
born  and  his  associates,  the  company  passed  through  the  assign- 
ment with  an  untarnished  record,  and,  in  1858,  its  credit  was 
higher  than  it  had  been  for  six  years.  Though  somewhat  expen- 

57A  number  of  the  English  investors  accused  Mr.  Osborn  of  taking 
advantage  of  the  company's  condition  to  fill  his  own  pockets,  but  this 
resulted  from  the  strong  feeling  over  increased  stock  assessments,  and 
Mr.  Osborn's  long  connection  with  the  company,  during  which  he  was 
ably  supported  by  these  very  same  men,  amply  refutes  this  assertion. 
What  compensation  he  received  was  by  regular  vote  of  the  directors. 

^Railway  Times,  June  19,  1858;  November  7,  1857;  August  7,  1858; 
January  I,  1858. 

™Ibid.,  January  i,  1858;  August  /,  1858. 

*°Ibid.,  August  7,  1858. 

^Annual  Report,  Illinois  Central  Railroad,  1855-1858. 


413]  FINANCES,  1851-1870  129 

sive,  on  account  of  the  various  financial  expedients  which  had  to 
be  adopted,  the  crisis  of  1857  taught  the  company  a  valuable 
lesson. 

By  1859  all  danger  from  the  floating  indebtedness  had  been 
removed  but  there  still  remained  the  Optional  Right  bonds  of 
1868  and  the  Free  Land  bonds  of  1860.  Under  the  mortgages 
these  bonds  could  be  retired  in  1859  and  1860,  and  in  those  two 
years  all  notes  and  floating  liabilities  in  excess  of  those  included 
in  strictly  operating  accounts,  and  the  Free  Land  and  Optional 
Right  bonds,  were  cancelled,  leaving  the  construction  bond  mort- 
gage of  1875  as  the  only  lien  upon  the  property.  Thus,  at  a  late 
date,  the  company  adopted  a  policy  that  should  have  been  pur- 
sued from  the  commencement  of  the  undertaking. 

During  the  years  1857  and  1858  the  shareholders  had  paid 
in  an  average  of  $35  per  share  on  stock  which  they  supposed 
would  cost  them  practically  nothing,  and  judging  from  comments 
in  the  English  press  British  investors  in  the  Illinois  Central  were 
thoroughly  indignant  at  the  American  directors.  Meetings  of 
shareholders  were  held,  two  special  committees  were  sent  to  the 
United  States,  and  the  English  stockholders  and  bondholders 
formed  a  permanent  organization  to  supervise  the  affairs  of  the 
corporation.62  The  continued  assessments,  stimulated  by  a  strong 
bear  movement  on  the  exchange,  forced  down  the  price  of  both 
stocks  and  bonds  and  for  a  time  many  of  the  small  shareholders 
were  thoroughly  frightened.  The  company  was  not  yet  in  a 
position  to  ignore  the  stock  market  and  accordingly,  as  a  peace 
offering,  the  directors  adopted  two  very  important  measures, 
both  of  considerable  financial  benefit  to  the  shareholders. 

The  first  of  these  was  the  Cancelled  Bond  Scrip  Dividend. 
By  1856  the  sales  of  land  had  been  sufficient  to  cancel  about  $600,- 

02Cf.  Railway  Times,  November,  1857  to  December,  1858. 

The  attitude  of  the  more  conservative  investors  is  shown  by  the 
following  letter  written  by  Richard  Cobden :  "I  do  not  change  in  the 
slightest  degree  my  opinion  in  consequence  of  the  fall  in  the  Illinois. — 
That  the  stock  will  go  up  again  to  its  former  level  I  have  no  doubt. 
It  is  not  as  a  railroad  investment  that  I  regard  so  favorably  this  under- 
taking, but  its  value  in  my  eyes  depends  on  the  landed  estate  which  is  the 
noblest  domain  ever  transferred  in  one  conveyance.  Nothing  but  an 
earthquake  or  some  other  convulsion  of  nature  can  impair  the  value  of 
2,600,000  acres  of  the  richest  soil  in  the  world,  situated  in  the  midst  of 
the  most  industrious  &  intelligent  population. —  The  Wall  Street  'bulls' 
and  'bears'  will  make  no  durable  impression  on  such  a  property."  Mss. 
letter  to  Sir  Joshua  Walmsley,  Midhurst,  September  18,  1857.  Original 
in  office  of  President,  Illinois  Central  Railroad. 


130  HISTORY   OP    ILLINOIS    CENTRAL   RAILROAD  [414 

000  of  the  construction  bonds  and  on  July  12,  1858,  as  the  result 
of  strong  pressure  from  the  English  shareholders,  the  manage- 
ment ordered  that  "whenever  the  amount  of  construction  bonds 
cancelled  in  a  year  should  amount  to  five  per  cent  on  the  share 
capital  of  the  company,  certificates  setting  forth  the  amount  so 
cancelled  should  be  distributed  pro  rata  among  the  shareholders 
and  this  scrip  should  be  entitled  to  the  same  dividends  as  regular 
stock."63  These  dividends  were  continued  until  1863,  by  which 
time  the  amount  so  distributed  was  $1,772,270.  After  1863  the 
profits  from  the  land  sales  were  divided  among  the  shareholders 
in  other  ways.64 

The  second  was  dated  from  May  27th,  1859,  and  entitled  any 
stockholder  who  had  paid  up  the  full  par  value  of  his  stock  to 
receive  four  per  cent  interest  per  annum  on  the  same  until  a 
regular  cash  dividend  of  at  least  four  per  cent  had  been  declared. 
There  had  been  previous  interest  dividends  paid  in  cash,  but  they 
were  sporadic,  and  this  measure  now  offered  an  inducement  to 
the  shareholders  to  pay  up  their  stock  in  full.65 

These  measures  had  a  very  important  influence  on  the  stock 
account  and  encouraged  the  shareholders  to  pay  up  all  unpaid 
calls  and  assessments.  As  a  result  the  number  of  full  paid  shares 
increased  from  none  in  1858  to  97,821  in  1863,  and  the  cash  re- 
ceived from  all  shares  from  $3,558,615  in  the  spring  of  1857  to 
$15,654,980  in  1860  and  $17,543,700  in  1863.66 

During  the  three  years  ending  December  31,  1860,  expen- 
ditures for  construction  amounted  to  $1,080,237.86  and  the  deficit 
in  net  earnings  over  interest  charges  to  $2,095,408.08,  thus  leav- 
ing $5,622,899.06  to  cancel  bonds  and  miscellaneous  obligations.67 
The  Free  Land  bonds  were  paid  off  at  maturity  in  1860,  and  the 
optional  right  bonds  were  either  redeemed  by  cash  payments  or 
converted  into  stock.  This  left  the  construction  bonds  of  1875  as 
the  only  funded  debt.  Moreover,  receipts  from  land  sales  had 
reduced  the  amount  outstanding  in  1860  to  approximately  fifteen 
millions,  as  against  a  share  capital  of  $17,945,400,  of  which  $15,- 
654,980  had  been  paid  in  cash.68  This  was  a  decided  contrast  to 

63Resolution  of  the  Board  of  Directors,  July  12,  1858,  quoted  in 
Railway  Times,  August  7,  1858. 

^Annual  Report,  Illinois  Central  Railroad,  1863. 

65Ibid.,  1855-1865 ;  Resolution  of  Board  of  Directors,  quoted  in  Rail- 
way Times,  June  18,  1858. 

^Annual  Report,  Illinois  Central  Railroad,  1856-1864. 

^Ibid.,  1858-1860. 

6SIbid.,  report  of  the  Land  Department,  1860. 


415]  FINANCES,  1851-1870  131 

conditions  in  1853  when  less  than  eight  hundred  thousand  dollars 
had  been  paid  by  the  shareholders. 

The  methods  used  to  obtain  money  for  construction  purposes 
having  been  reviewed  it  is  important  to  see  where  these  millions 
of  dollars  went.  To  December  31st,  1857,  when  the  railroad  was 
in  full  operation,  the  expenditures  for  equipment  and  construc- 
tion amounted  to  a  total  of  $23,436,668.32,  or  $33,198  per  mile,  to 
which  should  be  added  interest  during  the  period  of  construc- 
tion. Including  all  proper  construction  charges,  the  total  expen- 
ditures for  permanent  improvements  chargeable  to  capital  were 
as  follows : — 

Construction  charges  to  December  31st,  1857 $23,436,668.32 

Interest  charges  to  Dec.  31,  1856 $4,874,279.59 

Less  net  rcpts.  from  operation 1,742,930.30      3,131,349.29 


TOTAL  COST  OF  THE  ILLINOIS  CENTRAL $26,568,017.61C9 

While  the  aggregate  cost  is  high  there  seems  to  be  no  reason 
to  question  the  correctness  of  the  accounts.  In  1857  the  Illinois 
Central  Railroad  was  undoubtedly  the  best  built  road  in  the 
West ;  ample  terminal  and  yard  facilities  existed ;  right  of  way 
and  station  grounds  were  more  than  sufficient  for  the  existing  busi- 
ness ;  bridges  and  culverts  were  usually  of  stone  or  iron  and  al- 
ways substantial ;  grades  were  light,  curves  were  of  large  radius, 
and  tangents  constituted  about  ninety  per  cent  of  the  line ;  the 
equipment  was  up-to-date  in  every  particular,  ample  in  amount, 
and  well  built;  on  the  whole  roadbed  and  equipment  were  suffi- 
cient to  provide  for  traffic  several  times  that  of  1857.  There  were 
occasional  misappropriations  of  funds,  poor  contract  work,  and 
speculations,  but  there  was  not  that  organized  corruption  and 
mismanagement  characteristic  of  many  of  the  land  grant  roads. 
The  company  itself  did  most  of  the  construction  work  and  all 
contracts  were  satisfied  in  cash  or  bonds  at  par.  More6ver,  the 
officials  of  the  company  were  able  to  secure  supplies  and  labor 
at  low  prices.  The  average  wages  of  employees  did  not  exceed 
those  paid  in  the  eastern  states;  nearly  all  of  the  iron  was  pur- 

™Annual  Report,  Illinois  Central  Railroad,  1855-1857. 

The  interest  charge  is  based  on  the  following  assumptions:  (i)  the 
road  was  not  in  completed  condition  until  December  31,  1857;  (2)  inter- 
est, less  net  receipts  from  operation,  should  be  allowed  from  the  time 
individual  sections  were  opened  until  the  whole  was  in  complete  operation. 
These  assumptions  are  not  absolutely  correct,  but  the  above  plan  seems 
to  be  the  best  .basis  for  determining  interest  during  construction. 


132  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [416 

chased  in  England  at  very  low  prices ;  and  the  right  of  way,  which 
to-day  is  worth  a  fabulous  amount,  was  secured  at  a  nominal 
cost.  Three  times  the  English  shareholders  sent  a  special  com- 
mittee to  this  country  to  audit  the  construction  accounts  of  the 
Illinois  Central ;  they  were  given  complete  access  to  all  vouchers 
and  original  records;  and  in  their  published  reports  the  three 
committees  state  emphatically  that,  so  far  as  they  could  discover, 
the  accounts  were  honestly  kept,  and  no  fraud  or  speculation  of 
any  extent  was  found.70  Moreover,  from  a  comparison  of  detailed 
expenditures  of  the  Illinois  Central  with  those  of  several  other 
roads71  it  appears  that,  in  the  majority  of  cases,  the  Illinois  cor- 
poration paid  lower  unit  prices  for  material  than  any  of  these 
companies.  The  amount  of  interest  seems  somewhat  excessive,  but 
this  was  made  necessary  by  the  size  of  the  railroad,  which  pre- 
vented efficient  operation  of  the  road  until  the  whole  was  com- 
pleted in  1856.  Therefore,  it  is  safe  to  say  that  the  $26,568,017.61 
given  above  is  a  reasonable  and  bona  fide  statement  of  the  actual 
expenditures  and  is  a  proper  charge  to  capital.72 

It  is  not  possible  to  make  so  favorable  a  statement  in  regard 
to  the  wisdom  with  which  part  of  this  money  was  spent. 
Throughout  the  early  history  of  the  company  the  directors  held 
rather  exaggerated  views  of  the  traffic  possibilities  of  the  road. 
They  also  adhered  to  the  English  system  of  building  a  railroad 
in  a  thoroughly  substantial  manner.  It  goes  without  question 
that  the  heavy  initial  expenditures  materially  reduced  operating 
expenses,  but  it  is  also  true  that  a  much  lighter  construction 
would  have  answered  the  needs  of  that  period  just  as  well,  and 
the  company  would  have  been  saved  interest  charges  on  expendi- 
tures, which  were  useless  for  many  years.  For  instance  wooden 
trestles  would  have  answered  as  well  as  stone  culverts;  frame 
stations  might  have  been  used  instead  of  brick ;  and  similar  inex- 
pensive, but  serviceable,  equipment  could  have  been  used  to  ad- 
\antage  in  many  places. 

70Ackerman,  Historical  Sketch  of  the  Illinois  Central  Railroad.  Viz. 
Railway  Times,  November  27,  1858;  ibid.,  June  19,  1858;  Report  of  the 
Committee  of  Dutch  and  English  Stockholders,  1876. 

71  Viz.  New  Orleans,  Jackson  &  Great  Northern ;  Mississippi  Central ; 
Mississippi  &  Tennessee ;  Ohio  &  Mississippi ;  Michigan  Central. 

72With  different  methods  of  accounting  used  in  the  fifties  it  is  impos- 
sible to  obtain  an  absolutely  accurate  statement  of  expenditure  at  that 
time.  However,  the  figures  may  be  regarded  as  absolutely  correct  for  the 
first  two  places.  The  smaller  amounts  are  retained  to  conform  to  the 
figures  of  the  company. 


417]  FINANCES,  1851-1870  133 

The  period  from  1850  to  1857  was  a  time  of  construction; 
the  years  from  1857  to  1870  were  years  of  enormous  traffic  devel- 
opment which  necessitated  large  additions  to  capital.  Gross 
earnings  rose  from  $2,300,000  in  1857  to  $8,700,000  in '1870,  or 
an  increase  of  266%,  while  the  number  of  tons  of  freight  moved 
one  mile  increased  from  fifty  million  to  two  hundred  and  sixty 
five  million,  or  430%. 73  At  any  period  of  railroad  history,  such 
an  enormous  development  would  have  demanded  heavy  capital 
expenditures,  but  with  the  poor  operating  methods  then  in  vogue 
the  amount  of  equipment  had  to  increase  in  almost  direct  pro- 
portion to  the  growth  of  tonnage.  The  greater  number  and 
weight  of  trains  also  necessitated  many  improvements  of  the 
property.  In  the  thirteen  years  ending  December  31st,  1870,  the 
charges  to  capital  amounted  to  $7,084,421.10,  bringing  the  total 
cost  in  1870  to  $33,653,339.71,  or  $47,710  per  mile.  This  amount 
was  distributed  as  follows : — 

Construction  $4,317,169.05 

Equipment 2,767,252.05 


TOTAL  ...............................................................................................................  $7,084,421.1074 

In  addition  to  the  money  expended  on  the  Illinois  Central  proper, 
a  few  thousand  dollars  were  applied  to  capital  account  on  the 
Iowa  leased  lines,  but  this  is  not  included  in  the  total.75 

73  Annual  Report,  Illinois  Central  Railroad,  1857-1870;  the  last  three 
years  include  earnings  of  200  .to  402  miles  in  Iowa,  amounting  to  between 
a  million  and  a  million  and  a  half  a  year. 


15Ibid.    The  expenditures  for  Permanent  Improvements  were  distrib- 
uted as  follows  : 

Bridging  ..........................................................  $   496,016.59 

Ballasting  ........................................................     401,865.55 

Sidings    ............................................................      495,624.06 

Lake  shore  Protection  ................................     292,416.23 

Real  estate  ............  .  .........................................     163,115.91 

Rails    ................................................................       49,223.60 

Ties   .................................................................................... 

Fencing  ............................................................       74,815.79 

Telegraph  ........................................................       36,674.16 

Engineering  ....................................................       40,953.92 

Gen'l   Expense   .........................................  ......     420,360.65 

Buildings    ........................................................     951,108.45 

Masonry  ..........................................................      1  19,172.83 

Roadway    ........................................................     261  ,237.54 

Miscellaneous   ..................................................................     $4i3i7ji69.05 


134  HISTORY   OP   ILLINOIS    CENTRAL   RAILROAD  [418 

Statements  have  been  made  that  in  the  Civil  War  period 
and  the  years  immediately  thereafter  the  permanent  improvement 
account  of  the  Illinois  Central  was  unduly  increased  at  the  ex- 
pense of  operating  charges.76  There  is  just  enough  truth  in  the 
statement  to  make  necessary  a  somewhat  thorough  explanation. 
Prior  to  about  1872  or  1873  maintenance  expenditures  were  very 
high  even  when  compared  with  present  expenses  on  the  system,77 
and  it  is  improbable  that  with  such  liberal  appropriations  the 
property  would  run  down.  The  company  also  had  a  very  good 
system  of  accounting  and  the  accounts  were  as  accurately  dis- 
tributed as  on  any  railroad  of  the  time.  The  following  statement 
of  the  Board  of  Directors  approved  by  them  on  February  6th, 
1874,  shows  the  attitude  of  the  company  towards  this  matter: — 
"It  should  be  noted  that  upon  the  plan  of  making  up  the  con- 
struction account  followed  by  most  railways,  our  charge  to  con- 
struction expenditures  would  be  considerably  increased,  owing 
to  the  fact  that,  during  the  last  ten  years,  extensive  improve- 
ments and  additions  have  been  made  to  your  property,  which 
might  have  been  charged  to  capital  account,  but  have  been  in- 
cluded in  working  expenses. '  '78  Moreover,  with  the  exception  of 
the  years  1865  and  1866,  the  net  receipts  from  operation  greatly 
exceeded  the  fixed  charges  and  dividends,  and  consequently,  there 
was  no  motive  to  increase  the  capital  account  at  the  expense  of 
operating  charges.79  Thus,  it  seems  entirely  reasonable  to  accept 

Locomotives    $1,071,944.08 

Freight  cars  1,389,385.64 

Coal  cars  10,985.22 

Passenger  cars  140,151.49 

Shop  machinery,  etc 141,963.31        2,767,252.05 


TOTAL   $7,084,421.10 

79In  the  report  of  the  English  and  Dutch  Committee  of  1876  it  was 
claimed  that  up  to  that  time  many  items,  properly  chargeable  to  operation, 
were  included  in  capital  accounts. 

77For  instance,  in  1867,  the  year  the  Iowa  lines  were  taken  over,  but 
before  the  lease  had  affected  conditions  in  Illinois,  the  expenditures  for 
maintenance  were : — 

Bridges,  $123;  buildings,  $135;  labor,  $1,672;  total  maintenance  of  way, 
$2,080  per  mile ;  repairs,  locomotives,  $3,060  per  locomotive ;  repairs,  pas- 
senger cars,  $1,378  per  passenger  car;  repairs,  freight  cars,  $87  per  car; 
total  maintenance  of  equipment,  $1,470  per  mile.  Annual  Report,  Illinois 
Central  Railroad,  1867. 

78Quoted  in  Annual  Report,  Illinois  Central  Railroad,  1874. 

79Annual  Report,  Illinois  Central  Railroad,  1857-1870. 


419]  FINANCES,  1851-1870  135 

the  company's  statement  of  permanent  improvements  for  this 
period.  As  the  greater  proportion  of  the  permanent  improve- 
ments were  paid  for  out  of  surplus  receipts — in  other  words,  at 
the  expense  of  possible  dividends — it  may  be  taken  for  granted 
that  reasonable  economy  was  exercised.  However,  as  explained 
at  greater  length  on  page  18,  the  Illinois  Central  diverted  a  part 
of  the  receipts  of  the  Land  Department  from  the  purposes  out- 
lined in  the  mortgage  of  September  12th,  1851,  and  had  this  not 
been  done  there  would  have  been  a  deficit  in  some  of  the  years. 
In  no  year  did  the  net  earnings  and  ' '  proper ' '  receipts  from  the 
Land  Department  equal  the  interest  and  dividend  payments.  As 
a  result  the  company  virtually  paid  dividends  out  of  capital. 
While  this  policy  disregarded  the  spirit  of  the  mortgage  of  1851 
and  was  not  as  conservative  as  might  have  been  desired,  it  is 
unreasonable  to  accuse  the  company  of  a  serious  error  in  account- 
ing. 

In  the  period  before  1857,  practically  all  the  expenditures 
for  permanent  improvements  or  construction,  came  from  the  sale 
of  bonds ;  after  1857  net  receipts  from  operation  and  sale  of  lands, 
and  assessments  on  stock,  paid  the  major  portion  of  such  charges. 
From  1861  to'  1870,  net  receipts  from  sales  of  free  and  interest 
land  and  from  operation  exceeded  dividends  and  fixed  charges 
by  $2,381,203,  however,  the  fixed  charges  and  interest  dividends 
from  1857  tot1860  exceeded  the  net  earnings  by  $1,809,613.13, 
leaving  a  net  surplus  for  the  thirteen  years  of  only  $285,794.95.80 
The  deficit  of  interest  and  dividend  payments  over  net  receipts 
from  operation  alone  amounted  to  several  million  dollars.81 

In  President  Schuyler's  financial  plan  of  1851,  the  funded 

80 Annual  Report,  Illinois  Central  Railroad,  1857-1870. 

81From  1857  to  1870  there  were  received  in  cash  from  the  shareholders 
$12,880,265,  to  which  should  be  added  the  net  surplus  of  $285,794.95,  mak- 
ing a  total  of  $13,166,059.95.  During  this  period  various  expenditures  not 
chargeable  to  operation  were  as  follows : — 

Permanent  Improvements  $  7,084,421.10 

Redemption  Free  Land  Bonds,  Optional  Right  Scrip, 

current  liabilities,  etc.    (approximately) 6,500,000.00 


TOTAL $13,584,421.10 

Received    from    stockholders   and   net   surplus    from 

operation    13,166,059.95 


DIFFERENCE    $     418,361.15 

This  difference  would  be  accounted  for  by  the  surplus  in  1870,  and  miscel- 
laneous investments  during  the  period. 


136  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [420 

debt,  then  represented  by  the  $17,000,000  construction  bonds  of 
1875,  was  a  temporary  expedient.  Under  the  terms  of  the  mort- 
gage two  million  acres  of  land  were  set  apart  as  security  for  the 
loan,  and  the  instrument  was  so  worded  that  on  the  completion  of 
each  sale,  bonds,  equal  in  value  to  the  land  disposed  of,  would  be 
cancelled.  Thus,  through  the  operations  of  the  Land  Department, 
the  entire  loan  was  to  be  paid  off  not  later  than  1875.  Various 
difficulties  delayed  the  sale  of  the  construction  lands.  Except 
in  a  few  favored  regions,  transportation  facilities  were  still  poor 
and  several  million  acres  of  government  land,  selling  as  low  as 
$2.50  an  acre,  were  also  on  the  market.  By  the  mortgage  $8  was 
the  lowest  price  for  any  of  these  lands  and  the  company  found  it 
necessary  to  wait  until  most  of  the  government  domain  had  been 
disposed  of  before  placing  its  own  land  on  the  market.  The  con- 
struction of  the  railroad  in  1856  made  settlement  of  the  interior 
counties  of  Illinois  much  easier  and  by  that  year  practically  all 
of  the  government  land  had  been  sold.  Tens  of  thousands  of 
settlers  were  seeking  farms  near  the  railroad,  and  the  company 
was  thus  in  a  position  to  demand  reasonably  high  prices  for  its 
land.  However,  through  legal  restraints  and  the  good  judgment 
of  the  directors,  the  company  pursued  a  very  liberal  policy.  Cash 
payments  were  not  required,  as  was  the  case  with  the  federal 
land  office.  Instead,  the  settler  could  purchase  his  farm  on  credit 
by  giving  a  note  for  the  amount,  the  principal  to  be  paid  in  five 
equal  instalments,  with  interest  at  six  per  cent,  the  company,  of 
course,  retaining  title  until  all  payments  were  completed.82 

In  1856  active  efforts  were  made  to  sell  the  land  and  nearly 
five  hundred  thousand  acres  were  sold  for  upwards  of  four  and  a 
half  million  dollars.  The  sales  in  1857  were  almost  as  large.83 
Most  of  the  sales  were  made  to  actual  settlers  in  small  holdings 
of  one  hundred  to  a  hundred  and  twenty  five  acres,  although  at 
first  a  considerable  quantity  was  disposed  of  to  speculators.  In 
the  panic  of  1857  the  company  experienced  much  difficulty  with 
this  class  of  purchasers,  and  from  1857  on  it  refused  to  sell  except 
to  bona  fide  settlers. 

Up  to  the  summer  of  1857,  sales  were  all  that  the  company 
could  have  desired,  and  everything  indicated  a  continuation  of 

82Land  Office  Pamphlets,  Illinois  Central  Railroad,  1856-1870.  The 
interest  per  annum  varied  from  two  to  six  per  cent,  but  most  of  the  land 
was  sold  on  the  basis  of  six  per  cent. 

83Reports  of  the  Land  Office.  Annual  Report,  Illinois  Central  Rail- 
road, 1856,  1857. 


421]  FINANCES,  1851-1870  137 

the  purchases  on  the  same  extensive  scale.  But  just  at  the  height 
of  the  sales,  there  occurred  the  panic  of  1857  and  the  assignment, 
which,  of  course,  put  a  sudden  stop  to  immigration  into  the  state 
and  to  further  sales.  Purchases  dropped  from  $4,500,000  in  1856 
to  less  than  $500,000  in  1858  and  to  still  smaller  proportions  in 
1859.8*  More  important,  still,  many  of  the  farmers  along  the 
road  had  purchased  land  on  credit  and  the  panic  left  them  unable 
to  market  their  corn,  wheat,  and  pork,  or  else  they  had  no  crops 
to  market  on  account  of  repeated  droughts.  In  many  cases 
settlers  were  unable  to  make  any  payment  whatever.  Over  a  mil- 
lion dollars  was  due  in  both  1858  and  1859  and  the  purchasers  had 
no  cash  to  meet  the  instalments.  To  foreclose  the  mortgages  or 
notes  meant  distress  to  tens  of  thousands  of  farmers  and  a  serious 
impairment  of  revenue,  through  reduced  acreage,  to  say  nothing 
of  universal  ill-will.  In  this  emergency  the  company  followed  a 
wise  and  conciliatory  policy.  Farms  purchased  by  speculators 
or  those  too  shiftless  to  succeed,  were  foreclosed.  Where  crop 
failures  and  the  panic  prevented  payment  of  the  instalments  by 
bona  fide  settlers,  payment  in  kind  was  allowed,  generally  corn. 
Where  even  this  could  be  done,  notes  were  extended  and  in 
other  ways  the  farmers  were  encouraged  to  remain.  Most  of  the 
settlers  along  the  railroad  took  advantage  of  this  generosity,  and 
a  large  proportion  of  the  payments  due  in  1858  and  1859  were 
extended.  Altogether,  over  two  million  bushels  of  corn  were  re- 
ceived in  payment  of  land  notes  and  the  officers  of  the  company 
found  themselves  engaged  in  the  grain  business  on  an  extensive 
scale.  Miles  of  cribs  were  erected  along  the  tracks  and  corn  was 
held  there  for  several  months.  In  the  end  the  company  lost  quite 
a  large  amount  by  handling  this  grain,  though  it  was  much  more 
than  compensated  by  the  increased  good  will  of  the  people  along 
the  line  and  by  the  prosperity  of  the  farmers.85  Its  liberal  policy 
secured  it  the  support  of  the  entire  rural  population  of  Illinois, 
and  for  a  decade  the  Illinois  Central  Railroad  was  the  most  pop- 
ular corporation  in  the  state.  It  must  be  admitted,  however,  that 
the  English  shareholders  viewed  this  generous  policy  with  many 
misgivings  and  severely  criticised  the  management  for  its  lib- 
erality.86 

84Reports  of  the  Land  Department.  Annual  Report,  Illinois  Central 
Railroad,  1858,  1859. 

S5Report  of  the  Committee  of  English  and  Dutch  Stockholders,  1877; 
Fisher  Report,  Railway  Times,  November  27,  1858;  Annual  Report,  Illinois 
Central  Railroad,  1856-1861.  This  loss  was  borne  by  the  Land  Department. 

*«Ibid. 


138          HISTORY  OF  ILLINOIS  CENTRAL  RAILROAD         [422 

Following  the  droughts,  crop  failures,  and  panics  of  1857, 
1858,  and  1859,  came  the  good  times  of  1860,  and  the  sales  of 
land  again  reached  the  proportions  of  1856.  The  respite  was 
only  temporary,  and  in  the  spring  of  1861  the  great  struggle  be- 
tween the  North  and  South  commenced.  The  Illinois  farmer  was 
cut  off  from  his  southern  market ;  thousands  of  men  entered  the 
federal  a'rmies ;  and  lack  of  a  market  and  scarcity  of  labor  made 
the  year  1861  notable  for  its  severity  upon  the  farmers.87  But 
the  war  created  a  demand  for  vast  quantities  of  corn,  wheat, 
oats  and  meat  for  the  army ;  the  eastern  and  New  England  states 
increased  their  manufacturing  industries  enormously,  and  the 
West  was  called  upon  to  supply  a  part  of  the  raw  materials  for 
these  new  industries  and  food  for  the  men  supported  by  them.8* 
Several  hundred  thousand  settlers  took  up  claims  or  purchased 
farms  in  the  western  states  and  a  considerable  proportion  of  this 
immigration  remained  in  Illinois.  The  demand  for  railroad  lands 
grew  with  the  immigration  and  in  1863  the  sales  of  the  Land  De- 
partment surpassed  all  previous  records,  and,  that  too,  at  in- 
creased prices.89  By  1864  the  farmers  were  again  in  a  position 
to  pay  their  notes,  and  in  that  year  the  cash  receipts  of  the  Land 
Department  reached  the  high  water  mark  of  $1,440,000.90 

The  remainder  of  the  decade  continued  to  be  a  period  of 
unabated  prosperity  in  which  the  agricultural  interests  of  Illinois 
were  especially  favored,  and  the  demand  for  farms  remained 
good.  By  1870  practically  all  the  land  north  of  Vandalia,  and 
much  south  of  that  town,  had  been  disposed  of  at  good  prices, 
while  instalments  on  previous  purchases  had  been  paid  promptly 
and  in  full.91  Thus,  by  December  31,  1870,  $13,641,616.40  had 
been  received  from  construction  land  and  $8,800,000  more  from 
free  and  interest  lands,  while  upwards  of  four  millions  was  still 
due  the  company  on  notes,  making  a  grand  total  of  considerably 
over  $26,000,000  received  from  the  land  grant  prior  to  1870.92 

From  1870  to  1875  the  sales  of  new  land  were  very  small. 
Less  than  two  hundred  thousand  acres  of  inferior  land  was  sold, 

87Bogart,  Economic  History  of  the  United  States,  Chap.  xx.  Cf. 
Chap,  iv,  where  these  points  are  taken  up  at  much  greater  length. 

88Bogart,  Economic  History  of  the  United  States,  Chap.  xxv.  Cf. 
Chap.  iv. 

S9Annual  Report,  Illinois  Central  Railroad,  1860-1863. 

»°Ibid.,  1865. 

91Ibid^  1870. 

92 Ibid.,  1870,  report  of  the  Land  Department. 


423]  FINANCES,  1851-1870  139 

as  compared  with  five  times  as  much  in  the  previous  half  decade". 
However,  it  was  a  period  in  which  practically  all  the  outstanding 
notes  were  paid  off,  with  the  result  that  cash  receipts  were  large. 
From  1871  to  1874  $2,304,649.87  was  received  in  cash  for  sales 
of  new  land  and  nearly  all  of  the  unpaid  notes  of  1870  were  liqui- 
dated.93 At  the  close  of  1874  the  mortgage  of  September  13, 1851, 
was  cancelled  and  the  land  grant  was  freed  from  all  restrictions. 
The  following  table  shows  the  total  receipts  from  the  land  office 
from  1851  to  1874,  inclusive : — 

Construction  Bond  Fund $15,946,272.27 

Interest  Fund 6,051,856.85 

Free  Land  Fund 3,508,488.51  $25,506,627.63 


Expenses  Land  Office  to  1873 1,383,644.04 

Paid  Traffic  Department 297,589.59 

Bills  receivable,  etc.  (1874) 75,369.90      1,754,603.53 


TOTAL  $27,261,231.16 

Net  receipts  Land  Office,  1875  to  1907 2,219,061.66 


GRAND  TOTAL $29,480,292.8294 

By  1874  approximately  two  million  two  hundred  thousand  acres 
had  been  sold,  which  made  an  average  receipt  per  acre  of  a  little 
over  twelve  dollars,  including  expenses,  or  eleven  dollars  net  re- 

93Report  of  the  Land  Department.  Annual  Report,  Illinois  Central 
Railroad,  1874. 

94Ibid.,  1855-1907;  Fisher  Report,  Raiway  Times,  November  27,  1858; 
Report  of  the  Committee  of  English  and  Dutch  Stockholders,  1877;  cf. 
special  reports  of  the  president,  Illinois  Central  Railroad,  1890,  1897,  1906. 
In  1851  President  Schuyler  predicted  that  the  land  grant  would  be  suffi- 
cient to  pay  the  entire  cost  of  the  railroad  and  if  the  receipts  of  the  Land 
Department  had  been  applied  to  the  capital  account  that  prophecy  would 
have  been  fulfilled. 

Cost  of  Railroad  to  Dec.  3ist,  1857 $26,568,017.61 

Receipts  Land   Department  to   1874 — net 25,506,627.63 


DIFFERENCE $  1,061,389.98 

The  value  of  unsold  lands  in  1874  was  much  larger  than  this  difference. 
If  the  spirit  of  the  mortgage  of  1851  had  been  rigidly  followed  and  deficit 
in  earnings  before  1863  had  been  made  up  out  of  surplus  receipts  from 
1864  to  1870,  the  receipts  of  the  Land  Department  would  have  sufficed  to 
have  paid  back  the  cost  of  construction  to  1857.  However,  a  large  part 
of  the  receipts  from  the  land  grant  went  directly  into  the  treasury  of  the 
company. 


140  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [424 

ceipts.  This  grant  of  two  and  a  half  million  acres  of  land  has 
been  a  source  of  great  profit  to  the  company.  At  the  same  time 
it  has  been  managed  well,  and  sold  to  the  best  advantage  of  the 
community  as  a  whole,  as  well  as  of  the  company. 

Of  the  total  receipts  of  the  land  office,  $11,779,407.02  to 
1907,  or  $9,560,355.36  to  1874,  was  used  for  the  payment  of  inter- 
est and  dividends ;  the  cancellation  of  floating  indebtedness,  free 
land  bonds  and  optional  right  notes;  for  permanent  improve- 
ments defrayed  from  income ;  to  purchase  securities  of  other  com- 
panies, especially  the  lines  south  of  Cairo ;  in  a  word  to  the  same 
purposes  as  the  ordinary  receipts  from  operation.95  The  remain- 
der, amounting  to  $15,946,272.27,  was  applied  towards  cancelling, 
in  part,  the  construction  bonds  of  1875,  in  accordance  with  the 
mortgage  of  1851.  It  will  be  seen  from  the  report  of  the  land 
department  for  1872,  the  last  full  report,  that  $15,103,178.59,  re- 
ceived to  that  date,  paid  off  construction  bonds  to  the  value  of 
$13,609,500,  allowing  a  premium  of  eleven  per  cent,  or  $1,493,- 
678.59.  In  1873  and  1874  $657,856.47  was  received,  and  the  pro- 
portion of  premium  to  par  value  was  presumably  about  the 
same.96 

Since  the  mortgage  covered  $17,000,000  and  only  $14,200,000 
was  received  from  the  sale  of  land  there  was  a  balance  of  approxi- 
mately $2,900,000,  which  came  from  other  sources,  mainly  the 
Sterling  and  Currency  Redemption  loans.  These  bonds  had  three 
uses  (1)  to  provide  construction  bonds  for  the  Land  Department; 

(2)  to  pay  for  permanent  improvement  chargeable  to  capital; 

(3)  to  substitute  new  bonds  for  the  construction  bonds,  and  to 
allow  the  sales  of  construction  land  to  be  used  for  interest  and 
dividends. 

By  the  terms  of  the  construction  bond  mortgage,  bonds  had 
to  be  cancelled  on  the  completion  of  every  sale  of  land.  Prior  to 
1861  the  cash  receipts  from  construction  land  were  less  than  two 
and  a  half  million  dollars  and  sufficient  bonds  could  be  obtained 
in  the  open  market  on  reasonable  terms.  So  long  as  this  condition 
continued  the  terms  of  the  mortgage  inflicted  no  hardship  upon 
purchasers  of  land.  The  prosperity  resulting  from  the  Civil  "War 
allowed  settlers  along  the  railroad  to  pay  for  their  farms,  and,  in 
both  1862  and  1863,  there  were  large  demands  for  the  bonds, 
which  naturally  advanced  the  price  of  these  securities.  Many 

95Annual  Report,  Illinois  Central  Railroad,  1855-1906. 
"Ibid.,  1855-1875;  Report  of  the  Committee  of  English  and  Dutch 
Stockholders,  1877. 


425]  FINANCES,  1851-1870  141 

holders  saw  a  chance  to  make  a  profit  by  retaining  the  bonds  and 
forcing  the  company  to  recall  them  at  the  twenty  per  cent  advance 
specified  in  the  mortgage,  which  again  tended  to  advance  the 
price.  The  bonds  were  gilt  edge  securities  with  interest  payable 
in  gold  and  with  the  general  advance  in  prices  during  the  period 
they  increased  in  value  from  this  cause  also.  To  compel  the  set- 
tlers or  the  Land  Department  to  purchase  the  bonds  at  an  ad- 
vance of  fifteen  to  twenty  per  cent  was  an  injustice  and  to  remove 
the  difficulty  the  directors,  in  1863,  isused  $2,500,000  six  per  cent 
1st  lien  currency  redemption  bonds  of  1870,  with  the  object  of 
purchasing  construction  bonds.  These  new  bonds  could  be  ex- 
changed for  the  old  on  the  basis  of  $100  currency  bonds  for  an 
equal  amount  of  six  per  cent  construction  bonds,  or  $115  of  the 
new  for  $100  seven  per  cent  construction  bonds.97 

This  absorption  of  construction  bonds  in  1863  and  1864  tem- 
porarily satisfied  the  needs  of  the  Land  Department,  but,  by  1867, 
some  $6,441,145.37  had  been  received  from  purchasers  of  land  and 
conditions  were  as  bad  as  in  1863.  The  same  remedy  was  applied. 
In  1867,  sterliijg  six  per  cent  redemption  bonds  of  1875  to  the 
amount  of  £500,000,  or  $2,500,000,  were  issued  and  exchanged  for 
construction  bonds  on  about  the  same  terms  as  the  currency  re- 
demption bonds.98  Both  issues  were  easily  disposed  of,  and,  by 
1870,  the  entire  loan  of  $5,000,000  had  been  sold  for  cash  at  par 
or  above,  or  exchanged  for  construction  bonds  on  the  terms  speci- 
fied above.99  Of  the  combined  total  approximately  $4,000,000  was 
used  to  purchase  construction  bonds,  and,  of  this  amount,  per- 
haps $750,000  was  used  in  strict  accordance  with  the  terms  of 
the  mortgage  of  1851. 

When  the  two  loans  were  placed  it  was  understood  that  a 
part  of  the  proceeds  should  be  used  to  defray  the  cost  of  new 
equipment  and  improvement  of  the  property.  No  figures  are 
given  by  the  company  as  to  just  how  much  was  spent, for  this 
purpose,  but,  as  shown  on  page  186  the  approximate  amount  ex- 
pended in  this  way  was  a  million  and  a  half.  Of  this  perhaps  a 
half  was  received  from  the  sale  of  bonds  for  cash  and  the  re- 
mainder by  exchanging  redemption  bonds  for  construction  bonds 

97Annual  Report,  Illinois  Central  Railroad,  1863.  The  six  per  cent 
currency  bonds  were  a  first  class  security  and  the  few  bonds  sold  on  the 
open  market  brought  $1000  per  bond.  However,  nearly  all  of  the  issue 
was  exchanged  for  the  construction  bonds  on  the  agreed  terms. 

"Ibid.,  1867. 

"Ibid.,  1863-1870. 


142  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [426 

and  transferring  the  proceeds  from  the  Land  Department  to  per- 
manent improvements. 

However,  the  greater  portion  of  the  receipts  from  these  two 
issues  was  used  in  a  way  entirely  contrary  to  the  spirit  of  the 
construction  bond  mortgage.  When  that  instrument  was  made 
in  1851,  it  was  understood  that  the  two  million  acres  set  apart 
would  be  sufficient  to  cancel  the  entire  loan  and  that  all  the 
proceeds  from  the  land  would  be  used  to  retire  the  construction 
bonds.  If  the  construction  bonds  were  purchased  through  the  issue 
of  other  bonds  it  would  not  be  necessary  to  apply  the  receipts 
from  the  sales  of  land  to  that  purpose  and  the  money  so  received 
could  be  turned  into  the  general  treasury  to  be  used  for  interest 
and  dividend  payments.  About  $3,500,000  of  the  redemption  bonds 
were  used  to  purchase  construction  bonds  and  instead  of  an  equal 
amount  of  receipts  from  the  land  department  being  credited  to 
the  Permanent  Improvement  account,  as  an  offset  to  the  new 
bonds,  the  money  was  turned  into  the  Free  and  Interest  Land 
account  and  made  available  for  interest  and  dividend  payments. 
In  this  way  the  net  earnings  from  operation  were  greatly  in- 
creased and  the  company  was  able  to  pay  ten  per  cent  dividends. 
Had  the  $3,500,000  been  applied  in  strict  accordance  with  the 
mortgage  there  would  have  been  a  deficit  in  net  earnings  for  the 
period  from  1857  to  1870  of  approximately  $3,250,000,  instead 
of  a  surplus  of  $250,000.  Under  the  changed  conditions  the  com- 
pany could  not  consistently  have  paid  the  dividends  it  did.  In 
other  words,  following  a  strict  construction  of  the  mortgage  of 
1851,  the  company  from  1863  to  1870  was  paying  part  of  its  divi- 
dends out  of  capital.  Except  for  a  very  few  years  the  net  earn- 
ings from  operation  alone  were  never  sufficient  to  provide  for 
both  interest  and  dividends.  Moreover,  for  the  thirteen  years, 
the  net  earnings  from  operation  and  the  receipts  from  the  free 
and  interest  lands  as  originally  created,  were  less,  by  some  two 
and  a  quarter  million  dollars,  than  the  disbursements  for  interest 
and  dividends,  to  say  nothing  of  expenditures  for  permanent 
improvements.100 

However,  the  course  pursued  was  not  without  justification. 


of  Land  Department,  Annual  Report,  Illinois  Central  Rail- 
road, 1872,  1873,  1874;  Fisher  Report,  Railway  Times,  November  7,  1858; 
Report  of  the  Committee  of  English  and  Dutch  Stockholders,  1877.  Neither 
the  company  itself  nor  the  various  investigating  committees  make  any 
definite  statement  as  to  where  the  receipts  from  the  six  per  cent  redemp- 
tion bond  issues  went  and  for  that  reason  the  figures  given  above  are 
only  approximate. 


427]  FINANCES,  1851-1870  143 

Strict  adherence  to  the  mortgage  would  have  necessitated  a  reduc- 
tion of  dividends  by  about  two  per  cent  a  year.  After  the  railroad 
was  built  there  were  no  legal  restrictions  upon  the  company 's  use 
of  the  land  grant,  except  those  provided  in  the  mortgage  of  Sep- 
tember 13th.  The  other  restraints  were  those  of  the  company's 
own  making  and  so  long  as  the  security  of  the  bondholders  was 
not  impaired  it  had  a  perfect  right  to  abolish  such  self  imposed 
obligations.  Moreover,  under  the  circumstances,  it  would  have 
been  foolish  for  the  management  to  have  pursued  an  ultra-con- 
servative policy,  detrimental  to  the  immediate  interests  of  the 
shareholders,  when  a  more  liberal  construction  of  the  mortgage 
and  the  president's  plan  of  1851  was  very  profitable  to  the  owners 
of  the  road,  and  did  not  impair  the  value  of  the  property. 

Aside  from  the  objections  noted  above,  the  construction  bond 
account  was  well  managed,  and,  on  the  whole,  was  of  real  benefit 
to  the  railroad.  At  the  same  time,  it  was  a  rather  expensive 
loan.  For  the  $17,000,000  of  bonds  issued  there  was  received  in 
cash  only  $15,387,902.06  while  $18,493,678.59  was  spent  to  retire 
them,  allowing  a  difference  of  $3,105,776.53,  or  20.2 %.101  Prac- 
tically all  the  loss  fell  upon  the  seven  per  cent  issues,  and  by  some 
strange  movement  of  chance  the  six  per  cents  netted  the  company 
nearly  fifty  per  cent  more  per  bond  than  the  seven  per  cents, 
although  the  latter  were  equally  well  secured  and  bore  one  per 
cent  additional  interest.  On  the  other  hand,  the  construction 
bond  loan  of  the  Illinois  Central  was  far  more  profitable  to  the 
company  than  were  the  results  of  similar  loans  for  construction 
purposes  of  such  companies  as  the  Ohio  and  Mississippi,  St. 
Louis.  Alton  and  Terre  Haute,  and  Great  Western  of  Illinois. 

Closely  connected  with  the  operations  of  the  Land  Depart- 
ment and  the  issue  of  the  two  redemption  loans  was  the  action 
of  the  company  in  regard  to  the  stock  account.  Prior  to  the 
assignment  of  1857,  as  already  stated,  only  nominal  assessments 
were  made  on  the  share  capital,  most  of  the  funds  for  construc- 
tion coming  from  the  sale  of  bonds.  Then  from  1858  to  1863 
this  policy  was  reversed  and  heavy  calls  were  made  upon  the 
stockholders,  with  the  result  that  from  1857  to  1870  $12,880,265 
was  received  in  cash  from  stock  assessments.  This,  of  course, 
was  a  favorable  showing.  Beginning  as  early  as  1860  the  re- 
ceipts from  construction  lands  had  decreased  the  funded  debt 
and  during  the  same  period  payments  on  the  capital  stock 

lolAnnual  Report,  Illinois  Central  Railroad,  1855-1875.  Cf.  Report  of 
the  Committee  of  English  and  Dutch  Stockholders,  1877. 


144  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [428 

allowed  an  increased  investment  in  the  property,  without  a 
corresponding  increase  in  liabilities.  By  1865  these  two  parallel 
movements  brought  the  cost  of  the  railroad  to  something  like 
three  million  dollars  more  than  the  sum  of  all  liabilities ;  in  other 
words  there  was  a  surplus  of  that  amount.102  This  was  a  condi- 
tion directly  opposed  to  the  original  plan  of  the  promoters,  by 
which  the  bonds  were  to  pay  for  the  road  and  thfe  stock  was  to 
be  largely  "water",  and  to  conform  to  the  plan  of  1851  the 
directors  from  1858  to  1863  issued  $1,772,270  of  Cancelled  Bond 
Scrip  Dividends,  referred  to  above.103  Further  reduction  of  the 
funded  debt  continued  to  take  place  and  in  1865  a  stock  dividend 
of  ten  per  cent,  or  $2,119,930,  was  declared,  followed  in  1868  by 
another  of  eight  per  cent,  or  $1,881,100.104  According  to  the 
common  meaning  of  the  term  these  stock  distributions  constituted 
stock  watering,  because  in  no  case  did  the  shareholders  contribute 
a  penny  directly  to  the  company  in  return.  Nevertheless,  this 
action  was  justified  from  the  standpoint  of  the  shareholders  and 
the  company. 

The  reasons  advanced  for  these  stock  dividends  were  as  fol- 
lows: (1)  This  $5,764,600  was  represented  by  an  actual  cash 
investment  in  the  property,  though  received  through  operations 
of  the  Land  Department.  (2)  From  1856  to  1867,  the  share- 
holders had  made  up  annual  deficits  in  operation,  not  chargeable 
to  capital,  to  the  extent  of  $1,506,285.55,  and  the  stock  was  con- 
sidered a  repayment  of  these  advances.  (3)  Some  of  the  share- 
holders for  as  long  as  twelve  years  and  others  for  shorter  periods, 
had  invested  money  in  the  stock  of  the  company,  for  which  they 
had  received  practically  no  remuneration  and  naturally,  they 
desired  some  compensation  for  this  lost  interest.105  While  the 
last  two  items  were  important,  they  were  more  than  compen- 
sated for  by  later  indirect  rewards.  In  1864  the  stock  was  placed 
on  a  ten  per  cent  basis  and  dividends  continued  at  that  rate  for 
ten  years.  Furthermore,  the  stock  dividends  were  enormously 
valuable.  In  1863,  1865,  and  1868,  the  lowest  prices  reached  in 
August,  the  month  in  which  the  stock  was  received,  were  $100, 
$123,  and  $143,  respectively.106  For  the  shareholder  of  1862,  this 

102Annual  Report,  Illinois  Central  Railroad,  1863. 
™Ibid.,  1855-1863. 
10*/frtU,  1865,  1868. 

10*Ibid.,  1855-1867 ;  Fisher  Report,  Railway  Times,  November  7,  1858 ; 
Report  of  the  Committee  of  English  and  Dutch  Stockholders,  1877. 
108Compare  quotations  on  Illinois  Central  securities,  1860  ff. 


429]  FINANCES,  1851-1870  145 

represented  a  bonus  of  29.6%  of  stock,  worth  $36.30  per  share 
at  current  market  quotations.  For  all  the  stockholders  the  value 
of  the  stock  dividends  amounted  to  $7,069,756^90,  as  against  an 
alleged  loss  of  interest  of  $1,506,285.55.  Further  dividends  and 
stock  rights  on  this  additional  stock  may  be  ignored  as  they 
would  have  accrued  anyway,  and  the  same  dividend  would  have 
been  distributed  over  a  smaller  number  of  shares.  There  was 
nothing  wrong  in  the  stock  distributions,  the  amounts  were  com- 
paratively small,  and  a  cash  equivalent  had  been  received  in 
each  case  in  an  indirect  way,  but,  nevertheless,  these  three  divi- 
dends must  be  regarded  as  contrary  to  the  conservative  policy 
ordinarily  pursued  by  the  Illinois  Central. 

The  paramount  purpose  of  the  undertaking,  to  which  stock 
dividends,  price  of  stocks,  or  profits  from  the  sale  of  the  land 
grant  were  incidental,  was  its  efficient  operation  as  a  railroad. 
Upon  the  basic  fact  of  earnings  rested  the  permanent  financial 
success  of  the  company.  For  the  purpose  of  this  study,  the 
operating  accounts  of  the  railroad  may  be  divided  into  seven 
successive  classes,  viz.  gross  earnings  from  operation,  expenses 
of  operation,  taxes,  fixed  charges,  net  income  applicable  to  divi- 
dends (including  miscellaneous  income),  dividends,  and  surplus. 
Of  these  accounts  that  of  gross  earnings  was  determined  mainly 
by  the  general  prosperity  of  Illinois,  that  of  taxes  by  the  provi- 
sions of  the  charter,  that  of  fixed  charges  by  the  original  invest- 
ment in  the  railroad,  thus  leaving  the  item  of  expense  of 
operation  to  indicate  the  efficiency  of  management,  and  the  items 
of  dividends  and  surplus  to  indicate  the  financial  wisdom  of  the 
board  of  directors.107 

The  first  of  these  accounts,  i.e.  gross  earnings  from  opera- 
tion, as  the  product  of  traffic  carried  and  rates  charged,  was 
determined  by  the  traffic  conditions  outlined  in  Chapter  V,  most 
of  which  were  beyond  the  control  of  the  management.108  More- 
over, the  period  from  1855  to  1870  was  quite  abnormal  on  account 
of  the  panic  of  1857,  the  Civil  War,  the  prostration  of  the  South, 
the  feverish  industrial  activity  of  the  East,  and  the  fact  that 
the  territory  tributary  to  the  road  was  just  being  settled.109  In 

1<)7Operating  accounts  for  the  period  ending  1870  have  been  rearranged 
somewhat  so  as  to  conform  to  recent  practice.  No  attempt,  however,  has 
been  made  to  have  them  conform  to  the  latest  rulings  of  the  I.  C.  C. 

108Cf.  particularly  the  concluding  paragraphs. 

109A  very  good  present  comparison  is  the  traffic  on  the  newly  completed 
Canadian  Northern. 


146  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [430 

the  earlier  part  of  the  period,  or  from  1855  to  about  1861,  the 
railroad  was  just  being  put  in  shape  for  operation,  and  the 
earnings  were  much  below  normal.110 

Commencing  with  the  Civil  War,  gross  earnings  increased 
at  a  phenomenal  rate.  Not  until  1871  was  the  company 
able  to  handle  the  enormous  business  forced  upon  it,  and  al- 
though the  larger  traffic  necessitated  increased  expenses,  the 
margin  between  the  two  grew  larger  insted  of  smaller  from  year 
to  year.  From  a  million  and  a  half  in  1855  the  gross  earnings 
from  operations  steadily  advanced  until  the  maximum  of  eight 
million,  six  hundred  thousand  dollars  was  reached  in  1870. 
Part  of  this  was  due  to  increased  mileage,  but  the  receipts  on 
the  charter  lines  alone  were  seven  million  two  hundred  thousand 
in  the  final  year.111  In  the  first  five  years  in  which  the  road 
was  in  operation,  the  total  earnings  increased  by  approximately 
six  hundred  thousand  dollars,  about  twenty-five  per  cent.  This 
slow  growth  was  caused  by  the  panic  of  1857  and  the  crop  fail- 
ures in  succeeding  years.  During  this  time  passenger  earnings 
actually  decreased.112  Then,  beginning  with  the  second  year  of 
the  war,  and  continuing  until  the  close  of  the  decade,  there  took 
place  a  remarkable  traffic  development,  with  a  corresponding 
growth  of  revenue.113  In  the  eight  years  from  1862  to  1869 
freight  earnings  grew  from  one  million,  nine  hundred  thousand 
dollars  to  five  millions,  six  hundred  thousand,  or  one  hundred 
and  ninety  per  cent.  On  the  other  hand,  the  receipts  of  the 
passenger  department  increased  only  sixty-one  per  cent.114  As 
a  result,  freight  was  responsible  for  two-thirds  of  the  revenue 
in  1870,  as  against  less  than  half  in  1855.115 

110This  condition  is  made  clear  by  the  fact  that  quite  a  large  propor- 
tion of  the  equipment  purchased  up  to  1857  was  not  used  until  about  1862. 
Cf.    Annual  Report,  Illinois  Central  Railroad,  1855-1862. 
"Mnnwa/  Report,  Illinois  Central  Railroad,  1855-1870. 
112Ibid.,  1855-1862. 
d.,  1862-1870. 
d.,  1855-1870. 

115The  following  table  shows  the  proportion  of  freight,  passenger,  and 
miscellaneous  revenue  in  years  indicated : 

PERCENT      PERCENT       PERCENT 
1855          1862  1870 

Freight  40  54  65 

Passenger  47  37  24 

Miscellaneous  13  9  II 


431]  FINANCES,  1851-1870  147 

As  noted  in  Chapter  V,116  average  rates  per  ton-  and  pas- 
senger-mile were  actually  higher  in  1870  than  in  the  period 
immediately  preceding  the  Civil  War.  Passenger  rates  were 
the  most  peculiar  in  this  respect  and  were  practically  twice  as 
great  in  the  last  year  of  the  decade  as  in  1857  ,117  The  average 
freight  charge  on  all  goods  was  three  mills  per  ton-mile  higher 
in  the  later  year  than  in  1859.  In  general,  through  rates  de- 
clined during  the  period,  and  local  rates  increased,  but  there 
were  important  fluctuations  caused  by  special  conditions.118 
While  rates  were  well  maintained  the  total  number  of  ton-  and 
passenger-miles  more  than  doubled,  permitting  the  rapid  in- 
crease in  revenue  noted  above.119  However,  the  currency  infla- 
tion of  the  Civil  War  period  brought  about  such  a  change  in  the 
value  of  money  that  a  comparison  of  the  years  from  1862  to 
1867  is  almost  worthless.120  Moreover,  the  character  of  tonnage 
and  length  of  haul  changed  from  year  to  year,  and  this  cause 
alone  prevented  a  correct  estimate  of  actual  rate  movement.121 

As  a  result  of  the  heavy  increase  in  traffic  during  the  period 
expenses  of  operation  also  increased,  although  at  a  somewhat 
slower  rate  than  gross  earnings,  or  from  $1,453,000  in  1856  to 
$4,801,000  in  1870,  ($2200  to  $4300  per  mile).  However,  the 
operating  ratio,  i.e.  the  proportion  of  expenses  of  operation  to 
gross  earnings,  fluctuated  greatly.  Commencing  at  58.9%  in 
1856,  it  rose,  with  the  panic  of  the  following  year,  to  a  maxi- 

116Chap.  v;  see  also  Annual  Report,  Illinois  Central  Railroad,   1855- 
1870. 

wibid. 

W.;  cf.  Chap.  v. 


120Cf.  Bogart,  Economic  History  of  the  United  States,  Chap,  xxiv, 
especially  pp.  339,  340,  341;  Mitchell,  History  of  the  Greenbacks;  Fite, 
Agricultural  Development  of  the  West  during  the  Civil  War,  Quar.  Jour. 
Econ.,  XX,  259-278;  Chap.  v. 

121Statement  of  tonnage  given  in  Annual  Report,  Illinois  Central  Rail- 
road, 1855-1870.  Only  isolated  tariffs  and  the  average  rate  per  ton  or 
passenger  mile  are  available  for  comparison.  The  influence  of  the  inflation 
of  the  currency  during  the  period  from  1862  to  1870  is  quite  important. 
An  examination  of  the  charts  in  this  chapter  and  Chapter  v  shows  a  rapid 
increase  in  all  prices  and  charges  given  there,  the  rise  being  especially 
marked  in  1864  and  1865.  However,  it  wpuld  be  unfair  to  assume  that 
revenues  and  expenditures  rose  in  direct  proportion  to  the  inflation  of  the 
currency  in  these  years.  Many  payments  were  made  on  long  term  agree- 
ments, and  others,  such  as  wages,  cost  of  fuel,  etc.,  did  not  rise  with  the 
general  rise  of  gold. 


148  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [432 

mum  of  77.2%,  from  which  point  there  was  a  gradual  decline, 
due  to  increased  traffic,  to  a  minimum  of  46.8%  in  1862.  The 
Civil  War  caused  an  increase  to  62.9%  in  1865,  from  which 
level  there  was  another  decline  to  54%  in  1870.  On  the  whole 
the  ratio  of  expense  to  earnings  was  less  than  is  now  considered 
good  practice,  but  operating  conditions  at  that  time  were  so 
different  that  this  low  ratio  was  then  consistent  with  good 
management.  The  more  prominent  of  these  differences  are: 
(1)  The  volume  of  traffic,  due  largely  to  high  rates,  was  only 
a  fraction  of  what  is  now  carried.  This  resulted  in  less  wear 
and  tear  on  equipment  and  roadway.  (2)  Wages,  the  most 
important  single  item  in  operation,  were  considerably  lower  than 
at  present.  (3)  The  freight  and  passenger'  service  was  much 
poorer.  (4)  On  account  of  the  light  volume  of  traffic  and  the 
higher  return  on  capital,  fixed  charges  and  dividends  took  a 
much  larger  proportion  of  earnings.122 

As  might  be  expected  from  the  light  traffic  of  the  period 
maintenance  of  way  expenditures  represented  a  much  larger 
proportion  of  the  total  than  in  recent  years.  The  total  for  this 
account  rose  steadily,  with  the  exception  of  the  years  1861  and 
1862,  from  $323,000  in  1856  to  a  maximum  of  $1,632,000  in  1869 
($1,495,000  in  1870),  or  from  $450  per  mile  in  the  earlier  year 
to  $1500  per  mile  in  1870,  with  a  maximum  of  over  $2200  in 
1865.  This  expenditure  was  for  a  railroad  that  was  almost 
entirely  single  track  and  was  well  built  and  maintained  from 
the  first.  The  proportion  of  maintenance  of  way  to  expense  of 
operation  gradually  increased  from  22.3%  in  1856  to  36.5%  in 
1865,  with  an  average  of  over  30%.  The  question  of  whether 
these  expenditures  did  keep  the  roadway  in  good  shape  is  dis- 
cussed in  a  later  paragraph.1'23 

Expenditures  for  maintenance  of  equipment,  in  marked 
contrast  to  present  practice,  due  in  part  to  the  heavy  charges 
for  renewals  and  depreciation  now  insisted  on  by  the  Interstate 
Commerce  Commission,  were  much  smaller  than  for  mainte- 
nance of  way,  increasing  from  $278,000  in  1856  to  a  maximum 
of  $1,211,000  in  1870,  or  from  $442  per  mile  in  1857  to  $1093 
in  1870.  The  proportion  of  maintenance  of  equipment  to  ex- 

122In  reviewing  expenses  of  operation  prior  to  1870  the  fact  must  be 
kept  constantly  in  mind  that  it  was  not  until  a  much  later  date  that  modern 
methods  of  operation,  with  their  tremendously  efficient  handling  of  traffic, 
were  introduced. 

123Cf.  n.  134. 


433]  FINANCES,  1851-1870  149 

penses  of  operation  varied  from  a  minimum  of  16.5%  in  1859 
to  a  maximum  of  23.9%  in  1868.  As  might  be  expected,  the 
maintenance  per  locomotive  or  car,  particularly  since  most  of 
the  equipment  -was  still  new  and  much  of  it  purchased  in  1855- 
1857  was  not  used  until  after  1861,  was  much  less  than  at  pres- 
ent. Locomotive  repairs  per  locomotive  increased  from  $800  in 
1855  to  $2800  in  1870,  with  maximum  of  $4000  in  1865 ;  in  the 
same  years  passenger  car  repairs  per  car  increased  from  $250  to 
$900,  with  maximum  of  $1650,  and  repairs  to  freight  cars  per 
car  increased  from  $35  to  $75,  with  maximum  of  $100.124 

Expenditures  for  conducting  transportation  increased  more 
slowly  than  either  gross  earnings  or  maintenance  expenditures, 
and  formed  a  considerably  smaller  proportion  of  expenses  of 
operation  in  1870  than  in  1856.  The  actual  expenditures  in- 
creased from  $768,000  in  1856  to  a  maximum  of  $2,038,000  in 
1870,  or  from  $1240  per  mile  in  1857  to  $1840  in  1870.  The 
proportion  of  conducting  transportation  to  expenses  of  opera- 
tion, however,  decreased  from  53%  to  41.9%  during  the  same 
years.125  Of  these  totals  slightly  over  half  went  for  train  opera- 
tion, one  fourth  for  station  expenses,  and  the  remaining  fourth 
was  divided  among  the  other  charges,  including  part  of  the  traffic 
expense.  These  results,  taken  in  connection  with  the  large 
increase  in  traffic  mentioned  in  Chapter  V,  would  seem  to  indi- 
cate a  considerable  increase  in  operating  efficiency.  However, 
an  examination  of  the  detailed  statements  given  in  the  annual 
reports,  which  lack  of  space  prevents  being  printed  here,  shows 
that  this  is  not  the  case.1*6  Three  reasons  may  be  given  to 
explain  this  apparent  discrepancy:  (1)  Since  the  years  from 
1855  to  1862  were  years  of  abnormally  light  traffic  the  cost  of 
handling  it  was  heavy  in  proportion  to  the  actual  amount  car- 
ried. Consequently  decreased  costs  later  indicate  merely  a  nor- 
mal operating  efficiency.1'27  (2)  Few  important  improvements 

124It  must  be  remembered  that  these  expenditures  were  for  the  very 
much  smaller,  lighter,  and  cheaper  equipment  then  used. 

125This  ratio  is  generally  regarded  as  representing  the  actual  efficiency 
of  management,  since  maintenance  expenditures  are  determined  quite 
largely  by  external  conditions. 

126According  to  the  report  of  the  company,  although  the  figures  for 
the  earlier  years  are  probably  less  inclusive  than  for  the  later  one,  the 
cost  of  train  operation  increased  from  3.7  mills  in  1859  to  9.9  mills  in 
1870  per  passenger  mile,  and  from  1.3  mills  to  2.6  mills  per  ton  mile. 

127As  stated  in  Chap,  iv,  it  was  nef  issary  to  establish  complete  train 
service  during  the  years  before  1861,  ev<  l  though  the  traffic  did  not  justify 
so  extensive  schedules. 


150  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [434 

in  operating  methods  were  introduced  during  the  period,  while 
from  1863  to  1870  there  was  a  congestion  of  traffic  not  favorable 
to  efficient  operation.  (3)  Wages  and  the  cost  of  materials 
advanced  considerably,  especially  during  the  closing  years  of 
the  Civil  War.  In  summing  up  the  efficiency  of  conducting 
transportation  *during  the  period  it  may  be  said  that,  conducting 
transportation  took  a  smaller  proportion  of  the  gross  earnings 
than  at  present,  due,  largely,  to  a  higher  class  of  freight;  the 
cost  of  operations,  per  unit,  i.e.  train  ton,  or  passenger  mile,  was 
also  very  much  higher  than  at  present;  improvements  in  oper- 
ating methods  were  slight  and  insufficient  to  overcome  increased 
expenses.128 

The  last  item  in  expense  of  operation,  i.e.  general  expense, 
varied  quite  decidedly  from  year  to  year,  both  in  actual  amount 
and  in  proportion  to  the  total  cost  of  operation.129  The  total 
increased  from  $84,000  in  1856  to  a  maximum  of  $257,000  in 
1870,  with  a  proportion  of  5.5%  and  5.9%,  respectively.  How- 
ever, in  1861  general  expenses  consumed  eleven  per  cent  of 
operating  expenses,  while  in  1867  it  fell  to  only  four  per  cent. 
Since  this  account  included  many  miscellaneous  items  this  wide 
variation  is  to  be  expected.1180 

The  question  naturally  arises,  in  an  analysis  of  the  various 
items  in  expense  of  operation,  whether  the  expenditures  were 
sufficient  to  properly  maintain  the  railroad  and  to  provide  an 
adequate  service.  To  answer  these  questions  completely  would 
require  a  presentation  beyond  the  possibilities  of  this  chapter, 
but,  in  general,  an  affirmative  answer  may  be  given  to  both. 
The  matter  of  maintenance  charges  is  discussed  in  the  two  fol- 
lowing paragraphs  and  for  the  matter  of  service  it  may  be  said 
that  both  an  analysis  of  the  reports  of  the  company  and  an 
examination  of  the  publications  of  the  time  indicate  that  the 
train  service,  both  freight  and  passenger,  considering  the  rail- 
way development  of  the  period,  was  reasonably  adequate.  From 
a  little  before  1870  until  several  years  later,  there  was  much 

128Cf.  statements  in  regard  to  operating  efficiency  in  the  annual  reports 
of  the  president,  Annual  Report,  Illinois  Central  Railroad,  1855-1870. 

129The  main  items  in  general  expense  were :  salaries  general  officers, 
salaries  clerks,  general  office  expense,  insurance,  legal  expense,  miscel- 
laneous. 

130In  1861  there  is  an  item  of  $81,822  for  miscellaneous,  in  1868  insur- 
ance was  $48,513,  and  in  1869  general  office  expense  and  salaries  totaled 
$137,586. 


435]  FINANCES,  1851-1870  151 

complaint  about  the  service,  but  this  belongs  to  another  period.131 
Up  to  1862  both  maintenance  of  equipment  and  road- 
way charges  were  low,  but  this  did  not  result  in  depreciation 
of  the  property.  This  conclusion  is  borne  out  by  the  following 
considerations:  (1)  Most  of  the  equipment  was  from  one  to 
five  years  old  and  heavy  repairs  were  not  as  necessary  as  later. 
(2)  The  roadway  was  also  new  and  the  small  number  of  trains 
passing  over  the  tracks  did  not  wear  out  the  rails  or  affect  the 
condition  of  the  superstructure.  During  these  years  rails,  ties 
or  bridge  materials  did  not  need  replacement  and  labor  on  track 
was  almost  the  only  charge.  "Wages  for  efficient  trackmen  were 
low,  and  moderate  expenditures  kept  the  permanent  way  in  ex- 
cellent condition.  (3)  The  traffic  was  abnormally  light  and  the 
cars  and  locomotives  were  worked  only  a  part  of  the  time.  In 
fact,  a  considerable  proportion  of  the  equipment  purchased  in 
1856  and  1857  was  not  used  until  1862  and  did  not  require  exten- 
sive repairs.132  Thus,  the  locomotive  and  freight  car  repair 
charges  were  distributed  over  a  smaller  number  of  units  than  the 
reports  would  indicate,  and  repairs  on  locomotives  in  actual  use, 
considering  the  light  service  and  their  recent  purchase,  were 
fully  as  heavy  as  after  the  Civil  War.133 

From  1863  to  1870,  the  road  was  taxed  to  its  utmost  capac- 
ity and  both  roadbed  and  equipment  depreciated  rapidly.  The 
demands  upon  the  rolling  stock  were  so  great  that  proper  atten- 
tion to  repairs  was  impossible,  and  consequently,  much  larger 
expenditures  were  necessary  when  shopped.  This  condition  was 
aggravated  by  high  cost  of  labor  and  supplies.  The  hard  service 
had  a  similar  effect  on  superstructure,  rails  and  ties.  More- 
over, beginning  with  the  Civil  War,  an  increasing  amount  of  tie 
and  rail  replacement  was  necessary  on  account  of  a  larger  num- 
ber of  trains  and  natural  deterioration.  Despite  this  large  in- 

13LFrom  about  1871  until  after  1880  the  railroad  was  forced  to  retrench 
heavily  and  it  is  probable  that  conditions  during  that  period  are  confused 
with  conditions  before  1870  when  there  was  no  financial  necessity  for  cur- 
tailment in  service  or  insufficient  maintenance  charges. 

132With  the  light  traffic  the  average  life  of  the  ties,  iron  rails,  and 
bridge  materials  used  on  the  Illinois  Central  was  at  least  ten  years.  As 
most  of  the  track  was  not  laid  before  1854,  no  important  replacements 
were  necessary  until  about  1864  or  1865.  Moreover  the  quality  of  all 
materials  put  in  the  road  was  first  class  and  repairs  were  not  as  common 
as  on  other  roads  which  were  built  with  cheaper  materials.  Cf.  Acker- 
man,  Early  Illinois  Railroads,  p.  42. 

133 Annual  Report,  Illinois  Central  Railroad,  1855-1870.  The  cost  of 
repairs  to  each  locomotive  is  given  in  the  annual  reports. 


152  HISTORY    OF   ILLINOIS    CENTRAL   RAILROAD  [436 

crease  in  the  necessary  maintenance  charges  the  expenditures 
were  more  than  sufficient  to  keep  the  property  in  first-class  con- 
dition, and  the  railroad  was  in  much  better  working  condition 
in  1870  than  thirteen  or  fourteen  years  earlier.  It  is  also  rea- 
sonably certain  that  a  considerable  amount  of  money  was  ex- 
pended on  maintenance  which  a  more  conservative  system  of 
accounting  would  have  charged  to  capital.134 

Taxes,  with  the  two  minor  exceptions  mentioned  below,  were 
confined  to  the  payment  of  seven  per  cent  of  the  gross  earnings, 
as  provided  for  in  the  charter.  By  interpretations  of  the  courts 
and  of  the  state  auditor  this  amount  was  fixed  as  both  maximum 
and  minimum  after  the  full  payment  became  due  with  the  com- 
pletion of  the  railroad.  No  other  taxes  of  any  kind  were  as- 
sessed in  Illinois.  In  addition,  however,  there  was  a  slight 
federal  tax  on  earnings  and  dividends  under  the  war  legislation 
of  the  government.  In  Iowa,  the  leased  lines  were  subject  to 
the  usual  state  taxes,  which  were  quite  light.  Up  to  about  1863 
the  seven  per  cent  tax  was  a  heavy  burden  on  the  company,  but 
with  increased  revenues  later  it  ceased  to  be  burdensome. 

Net  earnings,  over  and  above  expenses  of  operation  and 
taxes,  increased  rapidly  ,with  the  growth  of  earnings.  From 
$424,613  in  1858  (the  net  income  previous  to  that  year  being 
carried  as  a  capital  account  in  this  monograph)  the  amount  rose 
to  a  maximum  of  $3,429,838  in  1870.  To  this  strictly  operating 
income  should  be  added  miscellaneous  receipts,  mainly  from  the 
sale  of  lands.  This  total  of  gross  income  increased  from  $581,- 

13*Annual  Report,  Illinois  Central  Railroad,  1862-1870. 

This  matter  of  maintenance  of  the  property  is  one  which  is  involved  in 
considerable  dispute.  In  the  report  of  the  Delegates  appointed  by  the 
committee  of  English  and  Dutch  stockholders,  made  in  1877,  and  in  the 
President's  special  report  of  1897,  it  is  asserted  that  the  property  was 
allowed  to  deteriorate  after  the  Civil  War.  The  investigating  committee 
undoubtedly  viewed  the  property  from  the  English  standpoint  and  natu- 
rally expected  to  have  the  railroad  kept  in  better  condition  than  it  was. 
The  report  of  1897  made  a  contrast  of  conditions  in  the  latter  year  with 
earlier  periods  and  there  was  an  unintentional  bias  against  reporting  the 
property  in  as  good  condition  as  it  really  was.  Moreover,  the  standards 
of  maintenance  have  advanced  very  rapidly  and  the  property  has  been 
built  up  to  a  large  extent  out  of  maintenance  expenses.  Furthermore,  as 
stated  in  the  text,  the  maintenance  of  way  and  equipment  charges  were 
very  heavy,  considering  the  amount  of  traffic,  and  it  is  difficult  to  see  how 
the  property  could  depreciate,  provided  reasonable  care  was  exercised  in 
the  disbursement  of  the  money. 


437]  FINANCES,  1851-1870  153 

732  in  the  earlier  year  to  $4,043,705  in  the  later  (a  maximum 
of  $4,184,661  in  1869). 

Against  this  gross  income  there  was  a  charge  for  the  fixed 
items  of  expenditure,  i.e.  interest  on  funded  and  floating  debt, 
miscellaneous  fixed  charges  on  the  bond  account,  and  rental  of 
leased  lines.  With  the  reduction  of  the  funded  debt  interest 
charges  steadily  decreased  from  $1,340,997  in  1858  to  only  $622,- 
053,  in  1870,  or  only  18%  of  the  gross  income  of  the  charter 
lines.  Including  rentals,  the  item  of  fixed  charges  amounted  to 
$1,194,570  in  1870,  or  not  quite  30%  of  the  gross  income.  Since 
nearly  $500,000  of  this  amount,  representing  the  lease  of  the 
Iowa  lines,  was  only  incidental  to  the  financial  operations  of  the 
Illinois  Central  proper,  the  company  was  in  a  very  strong  posi- 
tion so  far  as  income  account  was  concerned.  Moreover,  since 
the  bonds  were  bearing  only  six  and  seven  per  cent,  while  divi- 
dends were  ten  per  cent,  the  fixed  interest  charge  was  in  the 
nature  of  an  asset,  rather  than  a  drain  upon  net  revenues 
applicable  to  dividends.135 

The  amount  available  for  dividends  and  surplus,  after  all 
charges  for  operation,  taxes,  interest,  and  rentals  had  been  pro- 
vided for,  varied  from  a  deficit  of  $759,265  in  1858  to  a  surplus 
of  $2,849,135  in  1870  ($3,997,070  in  1869,  the  maximum).  From 
1861  on,  the  income  was  sufficient  to  provide  for  dividend  pay- 
ments, with  a  small  surplus  during  most  of  the  years.  However, 
if  the  dividends  be  set  off  against  the  net  income  from  operation, 
less  fixed  charges,  i.e.  omitting  payments  from  the  land  account, 
there  would  have  been  a  heavy  deficit  in  every  year.  In  fact, 
there  was  a  deficit  of  $1,908,717  in  dividend  payments  over 

135The  operation  of  the  Iowa  leased  lines  from  1867  to  1870  yielded 
a  slight  profit  to  the  Illinois  Central  and,  therefore,  the  rentals  paid  were 
not  a  liability  upon  the  finances  of  the  company.  Aside  from  these  rentals, 
the  fixed  liabilities  of  the  company  towards  the  close  of  the  period  were, 
as  the  text  indicates,  unimportant.  They  were  amply  covered  by  the 
receipts  from  the  Land  Department  and,  therefore,  left  the  railroad  prac- 
tically an  unencumbered  asset  of  the  stockholders.  With  this  high  security 
for  any  funded  debt  it  became  possible  for  the  company  to  borrow  at 
interest  rates  lower  than  the  dividends,  and  from  this  period  dates  the 
policy  of  the  Illinois  Central  of  carrying  a  large  funded  debt  bearing  an 
interest  rate  lower  than  the  average  returns  on  the  investment,  thus  per- 
mitting the  payment  of  dividends  higher  than  this  average  return.  The 
financial  strength  of  the  company  rests  on  its  wise  application  of  this 
policy. 


154          HISTORY  OP  ILLINOIS  CENTRAL  RAILROAD         [438 

income  applicable  to  dividends  for  the  period,  and,  had  the  net 
income  from  land  sales  not  been  included,  as  they  should  have 
been  according  to  a  strict  interpretation  of  the  mortgage,  there 
would  have  been  an  additional  deficit  of  over  seven  million 
dollars.*36 

After  1861  there  was  a  surplus  of  net  earnings  above  fixed 
charges  and  by  1863  the  amount  was  large  enough  to  justify  the 
directors  in  declaring  a  regular  semi-annual,  four  per  cent  cash 
dividend,  instead  of  the  four  per  cent  interest  on  full  paid  stock 
given  before  that  date.137  In  1865  the  annual  dividend  rate  was 
increased  to  ten  per  cent  and  was  made  payable  on  all  stock 
outstanding,  including  the  scrip  distributed  prior  to  that  time.138 
This  rate  was  continued  until  1874  and  was  equivalent  to  10.8% 
in  1864  and  1865 ;  to  12%  from  1866  to  1868,  and  to  13%  from 
1869  to  1874,  on  the  actual  cash  invested  by  the  shareholders.13* 
During  the  period,  the  Illinois  Central  stock  was  distinctly  a 
good  investment,  as  evidenced  by  the  stock  quotations,  which, 
in  July,  1868,  reached  a  high  mark  of  159.140  Including  cash 
and  stock  dividends  and  rights,  the  shareholder  received  from 
1863  to  1870,  on  an  investment  of  $100,  a  return  of  $106.30, 
equivalent  to  15.18  per  cent  a  year.  Moreover,  at  the  end  of 
this  time  his  stock  was  worth  forty  dollars  a  share  more  than 
in  I860.141  This  certainly  was  a  handsome  return  on  such  a  safe 
investment. 

Nor,  as  seen  above,  was  there  any  question  about  the 
justification  of  these  dividends  from  the  standpoint  of  net 

136These  statistics  bring  out  forcefully  the  statement  of  Richard 
Cobden  that  the  strength  of  the  railroad  lay  in  the  land  grant.  However, 
the  directors  of  the  company  must  be  criticised  for  their  lavish  use  of 
this  reserve  during  the  years  from  1863  to  1870.  In  the  language  of  Wall 
street  they  were  simply  "cutting  a  melon"  when  a  much  more  conservative 
use  of  the  reserve  formed  by  the  land  grant  would  have  saved  the  com- 
pany much  difficulty  later  on.  In  this  connection  it  is  interesting  to  com- 
pare the  policy  of  the  Canadian  Pacific  Railroad  in  the  use  of  funds 
obtained  from  its  land  grants. 

137 Annual  Report,  Illinois  Central  Railroad,  1863. 

138Ibid.,  1865 ;  i.e.,  eight  per  cent  in  1864  and  ten  per  cent  in  1865. 

139/&uf.,  1863-1870;  i.e.,  if  the  stockholder  of  record  of  1862  had  kept 
all  stock  distributions  this  would  have  been  his  return  per  $100  share. 

140Ibid.;  Commercial  and  Financial  Chronicle,  VIII,  9  (Jan.  2,  1869). 
This  includes  "rights". 

141 Commercial  and  Financial  Chronicle,  X,  9  (January  7,  1871). 


439]  FINANCES,  1851-1870  155 

earnings,  other  than  distribution  of  land  office  receipts.  In 
only  one  year,  viz.  1866,  did  the  dividends  exceed  the  reve- 
nue applicable  to  dividends  and  then  to  only  a  .slight  ex- 
tent.142 In  the  other  years,  there  was  no  question  about  the 
ability  of  the  company  to  maintain  the  dividend.  However,  the 
directors  did  not  always  pursue  a  conservative  course  and  ex- 
penditures from  1863  to  1870  were  almost  too  near  receipts  for 
perfect  safety.  In  1870,  the  year  when  net  earnings  were  the 
most  satisfactory,  the  fund  applicable  to  dividends  amounted  to 
only  11.4%  against  requirements  of  10.4%. 143  Omitting  receipts 
from  the  land  department,  necessarily  only  a  temporary  source 
of  income,  the  net  earnings  applicable  to  dividends  ranged  from 
5.4%  in  1866  to  8.6%  in  1870.144  According  to  the  company's 
books,  the  high  dividend  rate  was  guaranteed  by  a  large  surplus, 
but  this  was  merely  a  bookkeeping  account  and  was  not  repre- 
sented by  available  assets.1*5  By  paying,  say  nine  per  cent 
instead  of  ten  per  cent,  a  large  cash  surplus  could  have  been 
accumulated  which  would  have  allowed  a  continuance  of  eight 
or  nine  per  cent  dividends  over  a  much  longer  period.146 

Prior  to  1870  the  company  pursued  a  conservative  policy 
in  regard  to  extensions  involving  any  financial  risk.  From  the 
completion  of  the  road  to  the  Civil  War  several  traffic  arrange- 
ments with  connecting  or  branch  lines  were  made,  but  in  no  case 
was  the  financial  responsibility  large.  Bonds  of  the  Ohio  and 
Mississippi  and  the  Peoria  and  Oquaka,  to  the  extent  of  approx- 
imately $100,000  each,  were  purchased,  but  were  not  retained 
for  any  length  of  time.147  No  other  important  agreements  were 
made  except  with  the  Dubuque  and  Sioux  City  Eailroad  Com- 
pany. As  stated  in  Chapter  IV,  the  Illinois  Central,  in  1867, 

^-Annual  Report,  Illinois  Central  Railroad,  1866. 

143/fotW.,  i.e.,  ten  per  cent  cash  dividend  and  about  .4  per  cent  federal 
war  tax.  In  other  years  the  dividend  and  war  tax  were  barely  earned. 

*44Ibid.,  i.e.,  excluding  receipts  from  the  land  department  and  miscel- 
laneous sources  of  income. 

145The  surplus  was  obtained  by  adding  all  interest  payments  to  cost 
}f  construction  and  depreciation  on  construction  and  free  land  bonds  and 
deducting  from  it  net  receipts  to  1863.  This  account  was  not  only  not 
represented  by  cash  assets,  but  was  incorrect. 

146From  1874  to  1905  the  dividends  were  reduced  to  a  four  to  six  per 
cent  basis  and  the  accumulation  of  a  large  surplus  in  1870  might  have 
improved  this  condition. 

147 Annual  Report,  Illinois  Central  Railroad,  1855-1862 ;  Fisher  Report, 
Railway  Times,  June  19,  1858. 


156  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [440 

leased  the  property  of  the  Dubuque  and  Sioux  City  and  its 
subsidiary  lines,  the  Iowa  Falls  and  Sioux  City  and  the  Cedar 
Falls  and  Minnesota,  for  a  period  of  twenty  years. 

The  calendar  year  1870  was  the  most  successful  year  for 
the  Illinois  Central  railroad  to  that  time.  Gross  revenue  was 
large,  and  the  net  earnings  were  sufficient  to  pay  all  fixed 
charges,  a  ten  per  cent  dividend  and  provide  a  surplus  of  a 
quarter  of  a  million  dollars.  The  financial  policy  pursued  by 
the  company  in  the  construction  and  operation  of  the  railroad 
had  proved  entirely  satisfactory  to  the  promoters  and  owners 
of  the  stock.  The  construction  work  was  carried  on  without 
serious  financial  difficulty,  and  after  the  first  few  years  of  oper- 
ation the  net  earnings  were  all  that  could  have  been  reasonably 
desired.  The  land  grant  was  managed  well  and  by  1870  had 
paid  off  most  of  the  indebtedness.  While  the  sanguine  prospects 
of  the  promoters  were  not  completely  fulfilled,  the  investors  in 
the  property  were  amply  rewarded,  as  illustrated  by  the  follow- 
ing table : 

Total     cost     of     construction, 

equipment,    net    cash    assets 

and  supplies,  Dec.  31,  1870 $36,242,203.82 

Funded  debt  (net)  _ $  6,869,500.00 

Cash  paid  on  stock  (net). 19,726,700.00          26,596,200.00 


NET  SURPLUS $  9,646,003.82 

At  the  same  time  the  affairs  of  the  company  were  handled  in  a 
conservative  manner,  and  only  a  part  of  this  surplus,  not  quite 
six  million  dollars,  was  distributed  to  the  shareholders  in  stock 
dividends.  The  remainder  was  invested  in  the  railroad  and 
added  to  the  real  value  of  the  property. 


CHAPTER   VII. 

CONCLUSION. 

The  Illinois  Central  Railroad  has  always  occupied  a  unique 
position  among  the  railroads  of  the  country.  From  the  inception 
of  the  project  it  had  been  primarily  a  government  enterprise. 
It  was  the  first  important  railway  project  in  Illinois,  and  for 
twenty  years  its  construction  was  the  ambition  of  the  state  and 
its  citizens.  Moreover,  it  was  also  fostered  by  the  federal  gov- 
ernment. The  first  land  grant  ever  given  by  Congress  to  assist 
in  the  construction  of  a  railroad  was  given  to  the  state  of  Illi- 
nois to  complete  this  undertaking.  The  legislature  turned  over 
the  grant  to  a  private  corporation  and  the  Illinois  Central  Rail- 
road became  the  first  important  land  grant  railroad.  Finally, 
fhe  Illinois  Central  was  the  only  company  of  any  size  in  the 
Northwest,  or  upper  Mississippi  valley  that  followed  the  lines 
of  longitude  instead  of  latitude.  The  other  great  transportation 
systems  of  the  country,  the  New  York  Central,  Baltimore  and 
Ohio,  Pennsylvania,  Erie,  Northwestern,  Burlington,  and  Rock 
Island,  extended  west  from  the  Atlantic  seaboard  or  east  from 
the  Mississippi  River.  The  "Central",  on  the  other  hand,  was 
built  to  retain  the  commerce  of  the  Mississippi  valley  along 
north  and  south  lines. 

At  the  same  time,  though  in  this  respect  the  railroad  was 
similar  to  most  of  the  large  roads  of  the  West,  the  Illinois  Cen- 
tral was  built  through  territory  very  thinly  settled  and  was 
created  with  the  definite  object  of  developing  the  otherwise  dor- 
mant resources  of  such  region.  In  1850  the  central  counties  of 
Illinois  were  undeveloped,  and  the  railroad  was  constructed 
through  that  part  of  the  state  in  order  to  provide  cheap  trans- 
portation for  their  grain  and  live  stock.  The  land  grant  and 
special  privileges  given  the  company  were  merely  the  necessary 
inducement  to  private  capital  to  take  up  the  undertaking. 

From  any  view  point,  the  construction  of  the  Illinois  Cen- 
tral must  be  regarded  as  a  success.  After  four  successive  fail- 

iS7 


158  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [442 

ures  by  the  state  itself  and  private  individuals  a  group  of  Bos- 
ton and  New  York  capitalists  built  the  road  without  receiving 
one  cent  of  help  from  the  state,  other  than  the  land  grant  and 
privileges  granted  in  the  charter,  and  without  throwing  any 
financial  liability  upon  the  government.  The  financial  problems 
connected  with  construction  were  met,  and  the  enterprise  was 
carried  through  in  a  more  economical  manner  than  was  any 
other  similar  undertaking  of  the  period.  At  the  same  time  the 
promoters  constructed  the  railroad  according  to  the  best  stand- 
ards of  the  period.  When  finished  it  was  the  best  built  road  of 
its  size  in  the  central  West.  Its  operation,  after  the  first  four 
years,  was  also  successful  and  accomplished  what  the  early  advo- 
cates of  the  scheme  desired. 

This  success  was  accompanied  by  direct  financial  benefit  to 
the  federal  and  state  governments.  By  the  terms  of  the  land 
grant  act  the  alternate  odd  numbered  sections  not  turned  over 
to  the  state  were  sold  for  not  less  than  $2.50  an  acre,  double  the 
former  price,  and  the  government  lost  nothing  by  giving  half 
the  land  away.  In  fact,  the  construction  of  the  railroad  mate- 
rially hastened  the  sale  of  all  lands  in  central  Illinois.  Fur- 
thermore, the  Illinois  Central  was  of  almost  incalculable  value 
to  the  country  during  the  Civil  War.  The  least  important 
service  was  the  reduced  rates  for  troops  and  army  supplies.  Of 
far  greater  influence  was  the  fact  that  such  troops  and  supplies 
could  be  transported  at  all.  The  railroad  provided  an  easily 
guarded  connection  between  the  federal  armies  in  the  West,  and 
the  loyal  states  of  the  union.  Hundreds  of  thousands  of  men 
and  tens  of  thousands  of  tons  of  supplies  were  carried  over  the 
line  and  placed  quickly  and  safely  near  the  base  of  active  mili- 
tary operations.  Had  it  not  been  for  the  Illinois  Central  the 
vast  resources  of  the  central  West  could  not  have  been  placed 
at  the  disposal  of  the  government  as  easily  as  they  were,  the 
operations  of  the  army  would  have  been  hampered  and  re- 
stricted, and  the  ultimate  success  of  the  national  cause  delayed 
that  much. 

The  direct  influence  of  the  railroad  on  the  state  of  Illinois 
was  also  of  great  importance.  In  the  charter  the  state  wisely 
exacted  from  the  company  a  consideration  of  seven  per  cent  of 
the  gross  earnings  in  return  for  the  land  grant.  This  is  almost 
the  only  instance  where  either  the  state  or  national  governments 
received  any  immediate  compensation  for  lands  surrendered  to 
a  private  corporation.  The  development  of  a  system  of  internal 
transportation  was  the  primary  cause  of  the  state  debt,  and,  by 


443]  CONCLUSION  159 

the  foresight  of  the  legislature,  the  land  grant  was  made  the 
means  of  paying  off  the  indebtedness,  but  without  further  risk 
on  the  part  of  the  state.  It  might  almost  be  said  the  present  Illi- 
nois Central  corporation  was  created  for  the  purpose  of  increas- 
ing state  taxes.1  The  results  were  all  that  the  public  could  have 
asked.  Including  the  year  1870,  the  seven  per  cent  tax  on  the 
gross  earnings  of  the  company  amounted  to  a  total  of  four  mil- 
lion six  hundred  thousand  dollars,  or  nearly  a  third  of  the 
obligations  of  the  state  when  the  charter  was  granted.  The 
large  annual  receipts  permitted  the  prompt  payment  of  the 
interest  and  the  retirement  of  a  portion  of  the  principal  of  the 
state  debt  without  the  imposition  of  heavy  taxes  upon  the  indus- 
tries of  the  state.  Moreover,  the  building  of  the  road  opened 
up  to  settlement  thousands  of  farms,  and  the  increased  taxes 
were  also  an  important  consideration  in  placing  the  state  on  a 
good  financial  standing.  Through  the  cash  payments  into  the 
state  treasury  and  the  increased  valuation  given  the  property 
of  the  citizens  the  Illinois  Central  placed  the  state  of  Illinois 
upon  a  firm  financial  basis  and  made  its  credit  as  good  as  that 
of  any  commonwealth. 

The  construction  of  the  Central  meant  more  to  Illinois  than 
the  payment  of  half  a  million  dollars  of  taxes  a  year.  When 
Lieutenant  Governor  Jenkins  and  Sidney  Breese  first  suggested 
a  central  railway,  the  interior  of  the  state  from  Chicago  to 
Du  Quoin  and  from  Danville  to  Springfield  was  an  unoccupied 
wilderness.  When  Colonel  Mason  and  his  engineers  surveyed 
the  route  of  the  railroad  most  of  this  territory  was  still  unsettled 
and  its  resources  practically  untouched.  The  important  influ- 
ence of  the  Illinois  Central  came  in  the  development  of  this  part 
of  the  state. 

Twenty  years  later  there  had  taken  place  a  transformation 
in  the  interior  counties  of  Illinois.  One-fifth  of  the  entire  popu- 
lation of  the  state  was  living  in  these  counties,  and  their  prod- 
ucts formed  one-fourth  of  all  those  raised  by  Illinois.  Slightly 
more  than  one-half  the  people  of  the  state  were  within  twenty 
miles  of  the  Illinois  Central,  and  their  wealth  and  prosperity 
was  equal  to  that  of  any  portion  of  the  commonwealth.  Early 
travellers  declared  the  prairies  could  never  be  anything  but  a 
desert,  but  in  1870  they  were  the  granary  of  the  north  Atlantic 
states.  Nor  was  the  development  of  the  territory  tributary  to 

iPersonal   Statement  of  Mr.  Head,  clerk  of  the  House  during  the 
passage  of  the  charter. 


160  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [444 

the  railroad  confined  to  material  things.  Towns  and  cities  were 
numerous;  churches,  schools,  and  colleges  were  as  common  as  in 
other  parts  of  the  state;  and  the  people  were  prosperous  and 
contented.2 

This  development  of  central  Illinois  was  brought  about, 
almost  entirely,  through  the  efforts  of  the  Illinois  Central.  There 
were  other  roads  through  the  region,  but  until  after  the  close 
of  the  war  their  influence  was  slight  compared  with  that  of  the 
" Central".  Not  another  railroad  crossed  its  line  from  Cairo  to 
Centralia,  and  there  were  only  five  from  La  Salle  south.3  More- 
over, during  the  first  ten  years  of  the  company's  history  the 
transverse  lines  were  merely  feeders  for  the  north  and  south 
road,  so  far  as  local  territory  was  concerned.  Thus,  the  full 
credit  for  the  development  of  the  central  counties  of  Illinois  must 
be  given  to  the  Illinois  Central  Railroad. 

Furthermore,  the  construction  of  the  Illinois  Central  had  a 
far-reaching  influence  on  the  growth  of  the  country.  In  the  sixth 
and  seventh  decades  of  the  nineteenth  century  there  took  place 
an  important  expansion  in  the  production  of  food  stuffs  due  to 
the  increasing  demands  of  Europe  and  the  eastern  states.  Most 
of  this  development,  as  shown  in  the  preceding  pages,  occurred 
in  the  central  West,  and  the  Illinois  Central  Railroad  and  the 
country  dependent  upon  it  were  the  most  prominent  single  fac- 
tor in  increasing  the  movement  of  western  grain  to  the  north 
Atlantic  seaboard.  Next  to  the  Chicago,  Burlington  and  Quincy 
Railroad  the  Illinois  Central  handled  more  wheat  and  corn  than 
any  other  road  in  the  West  and,  if  the  total  tonnage  of  all  grains 
is  considered,  it  surpassed  even  that  road.  In  the  four  years  of 
the  Civil  War  there  was  no  other  portion  of  the  country  which 
increased  its  production  of  grain  to  as  great  an  extent  as  did  the 
central  counties  of  Illinois.  By  1870  the  agricultural  territory 
directly  dependent  on  the  "Central",  including  the  Iowa  leased 
lines,  supplied  a  larger  share  of  the  western  grain  forwarded 
to  the  Atlantic  coast  than  any  other  area  of  similar  size  in  the 
United  States. 

The  Illinois  Central  was  built  with  the  definite  object  of 
building  up  the  interior  of  Illinois  and  the  results  amply  justi- 
fied all  the  efforts  expended  in  securing  the  road.  Instead  of 
being  isolated  from  the  leading  markets  and  forced  to  be  largely 

2Cf.  Chap.  v. 

3Viz.,  Ohio  and  Mississippi,  Terre  Haute,  Alton  &  St.  Louis,  Great 
Western,  St.  Louis,  Alton  &  Chicago  and  Peoria  &  Oquaka.    Cf.  Chap.  iv. 


445]  CONCLUSION  161 

self  sufficing,  the  people  in  that  part  of  the  state  had  become  an 
essential  factor  in  the .  economic  organization  of  the  country. 
They  were  no  longer  self  sufficient,  but  produced  commodities, 
principally  grain,  needed  by  the  eastern  States  and,  in  turn, 
consumed  the  manufactured  goods  of  that  section.  Instead  of 
being  a  drawback  to  the  other  portions  of  the  state  they  occupied 
a  leading  position  in  its  economic,  as  well  as  political  and  social 
advancement. 

Thus,  the  construction  of  the  Illinois  Central  may  be  re- 
garded as  the  most  important  industrial  undertaking  ever  com- 
menced in  the  state  of  Illinois.  The  promoters  of  the  enter- 
prise, the  investors  in  the  securities  of  the  company,  and  the  men 
who  managed  its  financial,  traffic,  and  operating  affairs  after 
completion,  deserve  great  credit  for  their  efforts  in  making  it 
an  actual  reality,  even  though  they  did  so  with  the  purpose  of 
making  handsome  profits  for  themselves.  At  the  same  time,  the 
real  success  of  the  railroad  was  based  on  the  federal  land  grant. 
It  was  not  the  capital  behind  Robert  Schuyler  and  the  other  pro- 
moters that  gave  the  company  its  standing,  nor  was  it  the  busi- 
ness ability  of  the  directors  that  induced  capitalists  to  purchase 
the  stock  and  bonds  of  the  corporation.  The  enormous  extent 
of  the  land  grant  was  the  primary  cause  of  the  financial  stabil- 
ity of  the  company.  Had  it  not  been  for  the  land,  the  promoters 
could  never  have  obtained  the  funds  to  build  the  road. 

Moreover,  after  the  enterprise  was  completed,  it  was  the 
receipts  from  the  land  grant  which  kept  the  corporation  from 
going  into  insolvency.  From  1855  to  1861  there  was  not  a  year 
in  which  the  net  earnings  from  the  operation  of  the  railroad  paid 
even  the  fixed  interest  charges.  Without  the  receipts  from  the 
land  department  the  railroad  would  have  been  foreclosed  before 
it  was  finished.  Even  after  1862  the  operation  of  the  lines  did 
not  give  sufficient  profit  to  pay  a  regular  eight  per  cent  dividend 
on  the  actual  cash  invested  in  the  stock.  As  a  matter  of  fact,  the 
average  dividend  for  this  period  would  have  amounted  to  six 
per  cent,  instead  of  twelve,  had  it  not  been  for  the  earnings  of  the 
land  department,  and  there  would  have  been  no  stock  distribu- 
tions nor  surplus  at  the  end  of  the  period.  Investors  in  other 
corporations  which  were  managed  as  well  as  the  Illinois  Central 
were  making  ten  and  twelve  per  cent  or  even  more  on  their 
actual  investment,  and  the  actual  returns  to  the  owners  of  the 
Illinois  Central,  so  far  as  the  operating  accounts  were  con- 
cerned, were  below  a  reasonable  standard.  In  other  words  the 
land  grant  subsidized  the  railroad.  It  was  an  arrangement  which 


162  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [446 

benefited  both  parties,  and  while  the  promoters  of  the  Illinois 
Central  made  handsome  profits  on  the  operation  of  the  road,  the 
state  of  Illinois,  its  citizens,  and  the  people  of  the  country  as  a 
whole  received  equal  advantages  through  the  development  of 
the  territory  near  the  railroad. 

It  is  one  of  the  ironies  of  the  economic  history  of  the  United 
States  that  the  Illinois  Central  Railroad,  which  was  constructed 
to  develop  traffic  along  north  and  south  lines,  should  be  the 
foremost  influence  in  changing  the  commerce  of  Illinois  into  east 
and  west  lines.  The  Civil  War  and  the  changed  economic  con- 
ditions following  the  struggle  forced  the  company  to  send  the 
grain  of  central  Illinois  to  Chicago,  and  prevented  its  develop- 
ing a  profitable  market  in  the  south,  although  the  former  policy 
was  clearly  against  its  best  permanent  interests.  As  a  result, 
the  people  were  accustomed  to  ship  their  grain,  live  stock  and 
raw  materials  east  to  the  Atlantic  seaboard  and  after  the  Civil 
War  the  company  was  unable  to  bring  about  any  change.  So 
long  as  the  cost  of  carrying  freight  by  railroad  was  high,  and 
there  were  no  strong  east  and  west  lines  entering  the  state  below 
Chicago,  the  Illinois  Central  did  not  lose  much  by  this  diversion 
of  traffic.  It  obtained  almost  as  long  a  haul  from  the  central 
part  of  the  state  to  Chicago  as  it  would  have  to  Cairo  and  the 
return  freight  was  greater.  Up  until  1870  the  east  and  west 
lines  were  not  powerful  enough  to  interfere  with  the  business 
of  the  north  and  south  trunk  line  and  the  grain  traffic  of  the 
latter  was  reasonably  profitable. 

However,  in  the  closing  years  of  the  seventh  decade  the 
trunk  lines,  especially  the  Pennsylvania,  New  York  Central, 
Baltimore  and  Ohio,  and  Wabash,  extended  their  tracks  into 
central  Illinois,  and  one  by  one  they  gained  complete  possession 
of  the  connecting  and  feeder  lines  which  formerly  had  turned 
their  freight  to  the  Illinois  Central.  The  latter  company,  instead 
of  seeking  to  retain  them  even  to  the  extent  of  purchase  or  lease, 
pursued  the  ultra-conservative  course  of  neglecting  them  entirely. 
Thus,  the  company  was  practically  isolated  in  1870  and  did  not 
have  an  important  connecting  or  branch  line  directly  under  its 
control. 

As  a  result  of  the  changed  conditions  in  the  movement  of 
grain  and  the  expansion  of  the  east  and  west  railroads  the  Illinois 
Central  was  gradually  being  forced  into  an  awkward  position. 
Its  natural  business  along  north  and  south  lines  was  hampered 
and  almost  destroyed  by  the  prostration  of  the  South.  The  traffic 
which  it  had  built  up  from  central  Illinois  to  Chicago  was  being 


447]  CONCLUSION  163 

cut  into  by  east  and  west  railroads,  which  were  each  year  becom- 
ing better  able  to  compete  with  their  rivals.  Finally,  the  branch 
and  connecting  lines  dependent  upon  it  were  now  being  pur- 
chased or  leased  by  strong  companies  whose  interests  were 
diametrically  opposed  to  those  of  the  Illinois  corporation.  By 
1870  these  forces  opposed  to  the  Illinois  Central  had  not  made 
themselves  evident,  but  they  were  steadily  gaining  strength  and 
placing  themselves  in  a  better  position  for  the  conflict.  On  the 
other  hand,  the  Illinois  Central  neglected  to  better  its  position 
and  allowed  important  connections  to  slip  from  its  control.  When 
the  conflict  did  break  out  the  latter  company  was  unprepared  and 
suffered  accordingly.  Thus,  the  year  1870  represents  the  high 
tide  of  prosperity  for  the  Illinois  Central  Railroad,  and  not  again 
for  some  thirty-five  years  did  it  hold  as  strong  a  position  from 
the  financial  and  traffic  standpoint. 


APPENDIX. 

LAND  GRANT  ACT  OP  SEPTEMBER  20ra,  1850. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled: 

That  the  right  of  way  through  the  public  lands  be,  and  the 
same  is  hereby,  granted  to  the  State  of  Illinois  for  the  construc- 
tion of  a  railroad  from  the  southern  terminus  of  the  Illinois  and 
Michigan  Canal  to  a  point  at  or  near  the  junction  of  the  Ohio 
and  Mississippi  rivers,  with  a  branch  of  the  same  to  Chicago,  on 
Lake  Michigan,  and  another  via  the  town  of  Galena,  in  said 
State,  to  Dubuque,  in  the  state  of  Iowa,  with  the  right  also  to 
take  necessary  materials  of  earth,  stones,  timber,  etc.,  for  the 
construction  thereof:  Provided,  that  the  right  of  way  shall  not 
exceed  100  feet  on  each  side  of  the  length  thereof,  and  a  copy 
of  the  survey  of  said  road  and  branches  made  under  the  direction 
of  the  Legislature,  shall  be  forwarded  to  the  proper  local  land 
officers,  respectively,  and  to  the  general  land  office  at  Washing- 
ton city,  within  ninety  days  after  the  completion  of  the  same. 

Sec.  2.  And  be  it  further  enacted,  That  there  be,  and  is 
here  granted  to  the  State  of  Illinois,  for  the  purpose  of  aiding  in 
making  the  railroad  and  branches  aforesaid,  every  alternate  sec- 
tion of  land  designated  by  even  numbers,  for  six  sections  in 
width  on  each  side  of  said  road  and  branches ;  but  in  case  it  shall 
appear  that  the  United  States  have,  when  the  line  or  route  of 
said  road  and  branches  is  definitely  located  by  the  authority 
aforesaid,  sold  any  part  of  any  section  hereby  granted,  or  that 
the  right  of  preemption  has  attached  to  the  same,  then  it  shall 
be  lawful  for  any  agent  or  agents  to  be  appointed  by  the  Gov- 
ernor of  said  State,  to  select,  subject  to  the  approval  aforesaid, 
from  the  lands  of  the  United  States  most  contiguous  to  the  tier 
of  sections  above  specified,  so  much  land  in  alternate  sections, 
or  parts  of  sections,  as  shall  be  equal  to  such  lands  as  the  United 
States  have  sold,  or  to  which  the  right  of  preemption  has  attached 
as  aforesaid,  which  lands  being  equal  in  quantity  to  one-half  of 
six  sections  in  width  on  each  side  of  said  road  and  branches,  the 

165 


166  HISTORY   OF  ILLINOIS   CENTRAL  RAILROAD  [450 

State  of  Illinois  shall  have  and  hold  to  and  for  the  use  and  pur- 
poses aforesaid :  Provided,  that  the  lands  to  be  so  located  shall 
in  no  case  be  further  than  fifteen  miles  from  the  line  of  the 
road :  And,  further  provided,  the  construction  of  said  road  shall 
be  commenced  at  its  southern  terminus,  at  or  near  the  junction 
of  the  Ohio  and  Mississippi  rivers,  and  its  northern  terminus 
upon  the  Illinois  and  Michigan  Canal,  simultaneously,  and  con- 
tinued from  each  of  said  points  until  completed,  when  said 
branch  roads  shall  be  constructed,  according  to  the  survey  and 
location  thereof :  Provided  further,  that  the  lands  here  granted 
shall  be  applied  to  the  construction  of  said  road  and  branches, 
respectively,  in  quantities  corresponding  with  the  grant  for 
each,  and  shall  be  disposed  of  only  as  the  work  progresses,  and 
shall  be  applied  to  no  other  purpose  whatsoever :  And  provided, 
further,  that  any  and  all  lands  reserved  to  the  United  States 
by  the  Act  entitled  ' '  An  Act  to  grant  a  quantity  of  land  to  the 
State  of  Illinois,  for  the  purpose  of  aiding  in  opening  a  canal 
to  connect  the  waters  of  the  Illinois  river  with  those  of  Lake 
Michigan"  approved  March  second,  eighteen  hundred  and 
twenty-seven,  be,  and  the  same  are  hereby  reserved  to  the  United 
States  from  the  operation  of  this  Act. 

Sec.  3.  And  be  it  further  enacted,  That  the  sections  and 
parts  of  sections  of  land  which,  by  such  grant,  shall  remain  to 
the  United  States  within  six  miles  on  each  side  of  said  road  and 
branches,  shall  not  be  sold  for  less  than  double  the  minimum 
price  of  the  public  lands  when  sold. 

Sec.  4.  And  be  it  further  enacted,  That  the  said  lands 
hereby  granted  to  the  said  State  shall  be  subject  to  the  disposal 
of  the  Legislature  thereof,  for  the  purposes  aforesaid  and  no 
other;  and  the  said  railroad  and  branches  shall  be  and  remain 
a  public  highway,  for  the  use  of  the  Government  of  the  United 
States,  free  from  toll  or  other  charge  upon  the  transportation 
of  any  property  or  troops  of  the  United  States. 

Sec.  5.  And  be  it  further  enacted,  That  if  the  railroad 
shall  not  be  completed  within  ten  years,  the  said  State  of  Illinois 
shall  be  bound  to  pay  to  the  United  States  the  amount  which  may 
be  received  upon  the  sale  of  any  part  of  said  lands  by  said  State, 
the  title  to  the  residue  of  said  lands  shall  reinvest  in  the  United 
States,  to  have  and  hold  the  same  in  the  same  manner  as  if  this 
Act  had  not  been  passed. 

Sec.  6.  And  be  it  further  enacted,  That  the  United  States 
mail  shall  at  all  times  be  transported  on  the  said  railroad  under 


451]  APPENDIX  167 

the  direction  of  the  Post  Office  Department,  at  such  price  as  the 
Congress  may  by  law  direct. 

Sec.  7.  And  be  it  further  enacted,  That  in  order  to  aid  in 
the  continuation  of  said  Central  Railroad  from  the  mouth  of  the 
Ohio  river  to  the  city  of  Mobile,  all  the  rights,  privileges,  and 
liabilities  hereinbefore  conferred  on  the  State  of  Illinois  shall  be 
granted  to  the  states  of  Alabama  and  Mississippi  respectively, 
for  the  purpose  of  aiding  in  the  construction  of  a  railroad  from 
said  city  of  Mobile  to  a  point  near  the  mouth  of  the  Ohio  River, 
and  that  public  lands  of  the  United  States,  to  the  same  extent, 
in  proportion  to  the  length  of  the  road,  on  the  same  terms, 
limitations,  and  restrictions  in  every  respect,  shall  be,  and  is 
hereby,  granted  to  said  states  of  Alabama  and  Mississippi 
respectively. 

MEMORIAL  OP  DECEMBER  28TH,  1850. 

To  the  honorable  the  Senators  and  Representatives  of  the 
people  of  Illinois  in  General  Assembly  convened: 

The  memorial  of  Robert  Schuyler,  George  Griswold,  Gouver- 
neur  Morris,  Jonathan  Sturges,  Thomas  W.  Ludlow,  and  John 
F.  A.  Sandford  of  the  City  of  New  York;  and  David  A.  Neal, 
Franklin  Haven  and  Robert  Rantoul,  Jun.,  of  the  City  of  Boston 
and  vicinity,  respectfully  represents : 

That  having  examined  and  considered  an  act  of  Congress  of 
the  United  States,  whereby  land  is  donated  by  the  United  States 
for  the  purpose  of  insuring  the  construction  of  a  railroad  from 
Cairo,  at  the  mouth  of  the  Ohio  River,  to  Galena  and  the  north- 
western angle  of  the  State  of  Illinois,  with  a  branch  extending 
to  Chicago  on  Lake  Michigan,  on  certain  conditions,  therein  ex- 
pressed ;  and  having  also  examined  the  resources  of  the  tract  of 
country  through  which  it  is  proposed  that  the  said  railroad  shall 
pass,  and  the  amount  of  cost,  and  the  space  of  time  necessary 
for  constructing  the  same,  the  subscribers  propose  to  form  a 
company,  with  such  others  as  they  may  associate  with  them, 
including  among  their  number  persons  of  large  experience  in  the 
construction  of  several  of  the  principal  railroads  of  the  United 
States,  and  of  means  and  credit  sufficient  to  place  beyond  doubt 
their  ability  to  perform  what  they  hereinafter  propose,  make  the 
following  offer  to  the  State  of  Illinois  for  their  consideration : 

The  company  so  formed  by  the  subscribers  will,  under  the 
authority  and  direction  of  the  State  of  Illinois,  fully  and  faith- 
fully perform  the  several  conditions,  and  execute  the  trusts,  in 
the  said  act  of  Congress  contained.  And  will  build  a  railroad 


168  HISTORY   OF  ILLINOIS   CENTRAL  RAILROAD  [452 

with  branches  between  the  termini  set  forth  in  said  act,  with  a 
single  track,  and  complete  the  same,  ready  for  the  transportation 
of  merchandise  and  passengers,  on  or  before  the  fourth  day  of 
July,  which  will  be  in  the  year  of  our  Lord  eighteen  hundred 
and  fifty-four.  And  the  said  railroad  shall  be,  in  all  respects,  as 
well  and  thoroughly  built  as  the  railroad  running  from  Boston 
to  Albany,  with  such  improvements  thereon  as  experience  has 
shown  to  be  desirable  and  expedient,  and  shall  be  equipped  in  a 
manner  suitable  to  the  business  to  be  accommodated  thereby. 
And  the  said  company,  from  and  after  the  completion  of  the  said 

road,  will  pay  to  the  State  of  Illinois,  annually per  cent  of 

the  gross  earnings  of  the  said  railroad,  without  deduction  or 
charge  for  expenses,  or  for  any  other  matter  or  cause ;  provided, 
that  the  State  of  Illinois  will  grant  to  the  subscribers  a  charter 
of  incorporation,  with  terms  mutually  advantageous  with  powers 
and  limitations,  as  they,  in  their  wisdom,  may  think  fit,  as  shall 
be  accepted  by  said  company,  and  as  will  sufficiently  remunerate 
the  subscribers  for  their  care,  labor,  and  expenditure  in  that 
behalf  incurred,  and  will  enable  them  to  avail  themselves  of  the 
lands  donated  by  the  said  act  to  raise  the  funds,  or  some  portion 
of  the  funds,  necessary  for  the  construction  and  equipment  of 
said  railroad. 


BIBLIOGRAPHY 

Abbreviations : —  C  H,  Chicago  Historical  Library ;  I  C,  Illinois  Cen- 
tral Library,  Chicago,  111. ;  U  I,  University  of  Illinois  Library ;  W  H, 
Wisconsin  State  Historical  Library;  U  C,  University  of  Chicago  Library; 
C  P,  Chicago  Public  Library;  I  H,  Illinois  State  Historical  Library, 
Springfield,  111. 

SOURCES 

PUBLICATIONS  OF  THE  ILLINOIS  CENTRAL  RAILROAD  COMPANY. 

Annual  Report  of  the  President  to  the  Directors  for  the  year  ending 
December  31,  1855.  Gives  itemized  cost  of  construction  to  date.  [U.I., 
C.H.] 

Annual  Report  of  the  Directors  and  President  to  the  stockholders  for 
calendar  years.,  1856  to  1870,  inclusive.  These  reports  are  very  full  and 
contain  a  great  mass  of  detailed  information  relating  to  the  traffic  and 
financial  history  of  the  company.  Except  for  occasional  misprints  and 
certain  mistakes  in  accounting  the  statements  are  entirely  correct.  [C.H., 
I.C.] 

Annual  Report  of  the  Directors  to  the  stockholders  for  calendar  and 
fiscal  years,  1871  to  1907,  inclusive.  Contain  considerable  detailed  mate- 
rial, but  not  as  much  as  in  the  earlier  reports.  With  a  few  exceptions 
statements  and  statistics  are  perfectly  correct  and  no  attempt  is  made  to 
misrepresent  affairs.  [U.C.,  I.C.] 

Special  Reports  of  the  President  to  the  Directors  and  Stockholders, 
1890,  1897,  1906,  October  30,  1895,  December  19,  1895,  January  11,  1896. 
Contain  considerable  miscellaneous  information.  The  report  for  1897  is 
especially  valuable  as  it  contains  resumes  of  operating  conditions,  etc., 
before  1887.  [Reports  of  1897,  U.C. ;  Reports  of  1895,  1896,  W.H.;  all,  I.C.] 

Land  Pamphlets,  1855  to  1870  (two  or  three  missing).  These  are 
pamphlets  issued  by  the  Land  Department  soliciting  immigration  into  the 
state  of  Illinois.  There  is  some  important  information,  but  most  of  the 
statistics  are  worthless.  [C.H.] 

Report  on  the  Mineral  Resources  of  the  Illinois  Central  Railroad. 
J.  W.  Foster.  An  accurate  report  of  mining  conditions  along  the  Illinois 
Central  in  1857.  Gives  statements  concerning  cost  of  mining,  etc.  Pub- 
lished by  the  company,  1857.  [C.H.] 

Documents  Relating  to  the  Organization  of  the  Illinois  Central  Rail- 
road Company.  Contains  Act  of  Congress,  charter  and  amendments  to 
1852,  mortgage  of  1851,  letters  of  President  Schuyler,  Robert  Rantoul,  and 
D.  Neal,  miscellaneous  correspondence  between  the  company  and  the  Gov- 

169 


170  HISTORY   OF  ILLINOIS   CENTRAL  RAILROAD  [454 

ernor,  etc.,  and  a  copy  of  a  bond.    2nd  Edition,  1852.     Published  by  the 
company.     [C.P.,  U.I.] 

Map  of  Railroads  in  Illinois  in  1855.  Accompanies  annual  report  of 
the  Illinois  Central  Railroad,  March,  1856.  Shows  lines  built  and  under 
construction  at  that  date.  [C.H.] 

Laws  and  Documents  of  the  Illinois  Central  Railroad.  Contains  text 
of  charters,  mortgages,  etc.,  etc.  (Incomplete  set  in  Howard  Library, 
New  Orleans,  La.) 

Letter  from  Richard  Cobden  to  Sir.  Joshua  Walmsley,  September  18, 
1858.  Relates  to  land  grant  and  price  of  Illinois  Central  securities. 
(Original  in  office  of  the  President  of  the  Illinois  Central  Railroad;  pho- 
tographic copy  in  possession  of  Stuyvesant  Fish,  Esq.,  New  York.) 

Fiftieth  Anniversary  of  the  Chartering  of  the  Illinois  Central  Rail- 
road. Collection  of  speeches  at  banquet  in  celebration  of  the  Fiftieth 
Anniversary  of  the  Company.  Published  by  the  company,  1901.  [U.I.] 

Abraham  Lincoln  as  Attorney  for  the  Illinois  Central  Railroad  Com- 
pany. Contains  original  documents  relating  to  the  McLean  County  Suit 
Published  by  the  Company,  1905.  [U.I.] 

Report  of  the  Committee  of  English  and  Dutch  Stockholders,  etc. 
This  pamphlet  contains  the  conclusions  and  recommendations  of  the  inves- 
tigating committee.  Sir.  Douglas  Galton  and  Mr.  H.  de  Marez  Oyens 
made  a  thorough  investigation  of  the  books,  property,  and  general  condi- 
tion of  the  company  in  the  winter  of  1876-1877.  The  pamphlet  contains  a 
resume  of  the  cost  of  construction,  general  receipts,  etc.,  prepared  by  the 
delegates  from  the  books  of  the  company.  (Cf.  Fisher  Report  of  1858 — 
Railway  Times,  November  7,  1858.)  (Published  by  the  company,  1877.) 
[C.P.] 

Documents  relating  to  the  Lake  Front  Cases.  Collection  of  court 
decisions,  briefs,  etc.,  relating  to  the  suits  brought  by  the  City  of  Chicago 
and  the  State  of  Illinois  against  the  Illinois  Central.  [C.P.] 

Miscellaneous  official  and  semi-official  statements  and  reports,  including 

reports  of  meetings  of  the  Board  of  Directors,  statements  of  the  treasurer, 

proceedings   of   English    stockholders,    etc.,   published   in    Railway   Times 

(London),  American  Railway  Journal,  and  the  Chicago  Daily  Democrat 

PUBLICATIONS  OF  MISCELLANEOUS  RAILROAD  COMPANIES. 

Report  of  the  Dubuque  and  Sioux  City  Railway  Company,  May  31, 
1864.  Gives  statements  as  to  cost  of  construction,  capitalization,  etc.  of 
the  company.  [W.H.] 

Report  of  the  St.  Louis,  Alton  &  Terre  Haute  R.  R.  (Terre  Haute 
and  Alton),  1854,  1855.  [W.H.] 

Report  of  the  Dubuque  and  Sioux  City  R.  R.,  December  31,  1887. 
Contains  references  to  organization  of  the  Dubuque  &  Sioux  City  and 
lease  of  the  Iowa  Falls  &  Sioux  City.  [I.C.] 

PUBLICATIONS  OF  THE  UNITED  STATES  GOVERNMENT. 

Journal  of  the  Senate,  1843  to  1850  (28th  to  3ist  Congresses). 

Journal  of  the  House  of  Representatives,  1843  to  1850  (28th  to  3ist 
Congresses). 


455]  BIBLIOGRAPHY  171 

Congressional  Globe,  1843  to  1850  (28th  to  31  st  Congresses).  Con- 
tains speeches  in  Congress  in  regard  to  the  various  grants  proposed  for 
the  Illinois  Central,  votes  on  bills,  etc. 

Seventh,  eighth,  and  ninth  censuses,  1850,  1860,  1870;  also  Kith  cen- 
sus, volume  on  Agriculture;  ibid.,  volume  on  Transportation;  nth  census, 
volume  on  Land  Transportation.  Contain  detailed  information  in  regard 
to  crop  production,  population,  manufacturing,  and  social  conditions  in 
various  counties  of  Illinois ;  also  information  in  regard  to  agricultural 
conditions  in  1850  to  1870;  also  rates  of  transportation  on  products  from 
West  to  Atlantic  coast. 

Transportation  Routes  to  the  Seaboard,  ist  sess.  43rd  Cong.  Senate 
Reports,  serial  numbers  1588  and  1589.  Report  of  Senate  committee  on 
rates  from  the  West  to  the  seaboard ;  also  rates  on  grain  from  various 
local  points  to  distributing  centers ;  also  movement  of  crops,  prices,  cost 
of  transportation,  testimony  of  railroad  men  and  grain  merchants,  etc. 
It  is  almost  invaluable  in  the  treatment  of  the  traffic  of  the  Illinois 
Central. 

Report  on  Wholesale  Wages,  Prices,  and  Transportation.  Report 
by  N.  W.  Aldrich  from  the  Senate  Committee  on  Finance,  March  3,  1893 
(Senate  Report  No.  1394,  Finance  Committee,  2  sess.,  52  Cong.)  4  vols. 
Washington,  1894.  Used  for  prices  on  wheat,  corn,  oats,  and  meat  at 
Chicago  and  New  York  from  1840  to  1870  inclusive. 

PUBLICATIONS  OF  THE  STATE  OF  ILLINOIS. 

Journal  of  the  Senate,  1830  to  1851. 

Journal  of  the  House  of  Representatives,  1830  to  1852.  (State 
Printer,  Springfield,  1830  to  1852.) 

Session  Laws  of  Illinois,  1837  to  1851  inclusive.  (State  Printer, 
Springfield,  1837  to  1851  inclusive.) 

The  State  of  Illinois  vs.  The  Illinois  Central  Railroad,  W.  H.  Stead, 
Attorney  General,  In  the  Supreme  Court  of  the  State  of  Illinois,  Feb- 
ruary term,  A.  D.  1907.  (State  Printer,  Springfield,  111.,  1907.)  Con- 
tains charter  of  the  Illinois  Central  Railroad,  all  amendments  thereto, 
and  gross  earnings  of  the  charter  lines  from  1870  to  1906,  with  other 
miscellaneous  information  in  regard  to  suit  for  back  taxes.) 

Report  of  the  Illinois  Railway  and  Warehouse  Commission,  1871,  1872, 
1873.  Statistics  of  the  Illinois  Central  and  remarks  of  the  commissioners. 
(State  Printer,  Springfield,  1871,  1872,  1873.) 

Proceedings  of  the  Constitutional  Convention  of  1869.  Remarks  of 
members  and  action  of  the  Convention  in  regard  to  the  Illinois  Central 
and  the  railroads  of  the  state.  (State  Printer,  Springfield,  1870.) 

NEWSPAPERS. 

Chicago  Daily  Democrat,  January  ist,  1849  to  December  3ist,  1853. 
Contains  numerous  articles  in  regard  to  the  charter  and  construction  of 
the  road.  [C.H.] 

Illinois  State  Journal,  January  1st,  1849  to  December  3ist,  1851. 
Contains  a  large  number  of  letters,  speeches,  etc.,  in  regard  to  the  Hoi- 


172  HISTORY  OF   ILLINOIS   CENTRAL   RAILROAD  [456 

brook  companies,  the  passage  of  the  charter,  and  the  character  of  the  in- 
corporators.     [I.H.] 

Illinois  Daily  State  Register,  January  ist,  1849  to  December  3ist, 
1851.  Supplements  the  Illinois  State  Journal.  [I.H.] 

Egyptian  Republican,  July  30,  1859  to  July  6,  1861.  (Centralia  Daily 
Sentinel — Office  Centralia  Daily  Sentinel,  Centralia,  111.) 

Mound  City  Journal,  1859  to  1861 — calendar  years.  (Cairo  Arfgus — 
Office  of  the  Cairo  Argus,  Cairo,  111.) 

Cairo  Delta,  April  13,  1848  to  September  20,  1849.  (Office  of  the  Cairo 
Trust  Company,  Cairo,  111.) 

Cairo  Sun,  April  10,  1851  to  April  10,  1852.  (Office  of  the  Cairo  Trust 
Company,  Cairo,  111.) 

Cairo  Times,  May  3ist,  1854  to  April,  1859.  (Office  of  the  Cairo  Trust 
Company,  Cairo,  111.) 

Urbana  Union,  September  2ist,  1853  to  July,  1855.  (Urbana.  In 
possession  of  Mr.  J.  O.  Cunningham,  Urbana,  111.) 

Belleville  Advocate,  September,  1849  to  September,  1869.  (Belleville 
Public  Library,  Belleville,  111.) 

Cairo  Mirror  and  City  Directory,  1864,  1865.  (Cairo  Public  Library, 
Cairo,  111.) 

The  above  newspapers  contain  information  in  regard  to  the  construc- 
tion and  operation  of  the   Illinois   Central,   1851   to   1870.     Most  of  the 
material  is  fragmentary  and  is  of  little  historical  value. 
RAILWAY  AND  FINANCIAL  PERIODICALS. 

Hunt's  Merchant's  Magazine  and  Commercial  Review,  New  York, 
1850  to  1870.  Of  comparatively  little  value,  especially  after  1855. 

Commercial  and  Financial  Chronicle,  New  York,  1865  to  1870.  Con- 
tains abstracts  of  annual  reports,  miscellaneous  items,  editorials,  statistics 
of  stock  and  bond  quotations,  and  resume  of  crop  and  financial  conditions. 

Railway  Times,  1850  to  1870.  (London,  Eng.)  Contains  extracts 
from  proceedings  of  the  Board  of  Directors,  etc.,  of  the  English  stock- 
holders, etc.  Practically  all  letters  or  statements  published  by  the  com- 
pany from  1851  to  1870  are  contained  in  this  series.  It  is  the  most  impor- 
tant single  reference  used  for  the  period  from  1851  to  1858.  Practically 
all  statements  are  official  or  semi-official.  (John  Crerar  Library,  Marshall 
Field  Building,  Chicago,  111.  The  set  is  complete.) 

Railway  Journal,  1854.  (Philadelphia,  John  Crerar  Library,  Marshall 
Field  Building,  Chicago,  111.)  Of  very  little  importance. 

American  Railway  Journal,  1850  to  1860.  (New  York,  1850  to  1860.) 
Contains  a  great  many  statements,  notices,  advertisements,  reports,  edito- 
rials, etc.  in  regard  to  the  Illinois  Central.  The  references  to  the  Dubuque 
and  Sioux  City  Railway  are  especially  important.  A  large  number  of  offi- 
cial statements  of  this  company  are  included.  (James  Hill  Railway  Col- 
lection, University  of  Wisconsin  Library,  Madison,  Wis.) 

Railroad  Record,  1849  to  1853.  (Cincinnati,  1849  to  1853.)  Duplicates 
material  in  American  Railway  Journal  and  adds  some  additional  informa- 
tion of  slight  importance.  (Mercantile  Library,  St.  Louis,  Mo.) 


457]  BIBLIOGRAPHY  173 

MISCELLANEOUS  PUBLICATIONS.* 

Illinois  Monthly  Magazine,  complete.  (Vandalia,  111.,  1830.)  Contains 
some  interesting  information  in  regard  to  early  plans  for  building  a  rail- 
road or  canal  through  the  state.  [C.H.] 

Fergus  Historical  Series,  Nos.  17  and  24.     (Publications  of  the  Chi- 
cago Historical  Society.)     Personal  reminiscences,  etc. 
Regan,  Wilds  of  America.     [C.H.] 
J.  M.  Peck,  Gazeteer  of  Illinois,  1837.     [C.H.] 

H.  S.  Tanner,  Views  of  the  Valley  of  the  Mississippi  River.     [C.H.] 
Publications  of  the  Cairo  City  and  Property  Company.     [I.H.] 
Anon.,  The  Past,  Present  and  Future  of  the  City  of  Cairo.     [I.H.] 
Henry  Long,  Report  on  the  Condition  and  Prospect  of  Cairo.     [I.H.] 
Annual  Reports,  Chicago  Board  of  Trade,  1858  to  1870.     (Chicago, 
1858  to   1870.)     Give  statistics  of  the  city  of  Chicago,  including  receipts 
over  various  railroads,  the  canal,  and  the  lake.    Of  special  importance  in 
traffic  chapter.     [U.I.] 

SECONDARY   AUTHORITIES.** 

W.  K.  Ackerman,  Early  Illinois  Railroads.  (Fergus  Historical  Series 
No.  23,  Fergus  Printing  Co.,  Chicago,  1884.)  Contains  some  valuable  in- 
formation, but  on  the  whole  is  of  little  historical  importance. 

Davidson  and  Stuve,  A  Complete  History  of  Illinois  from  1673  to 
1884.  (2nd  Edition,  Springfield,  W.  H.  Rokker,  1884.)  Treats  the  Illinois 
Central  from  a  biased  point  of  view. 

J.  Moses,  Illinois  Historical  and  Statistical  (Fergus  Print,  Chicago, 
1889-1892.)  Gives  some  interesting  information,  but  not  of  great  historical 
value. 

Hinsdale,  The  Old  Northwest.     (New  York,  1888— T.  MacCoun.) 

A.  T.  Andreas,  History  of  Chicago.  (A.  T.  Andreas,  Chicago,  1884- 
1886 — 3  v.)  Fairly  accurate  and  contains  some  valuable  information  on 
the  relations  of  the  city  of  Chicago  and  the  Illinois  Central. 

Sidney  Breese,  The  Early  History  of  Illinois.  (E.  B.  Myers  &  Co., 
Chicago,  1884.)  The  Appendix  contains  correspondence  between  Sidney 
Breese  and  Senator  Douglas  in  regard  to  their  respective  influence  in  secur- 
ing the  federal  land  grant  act. 

Helper,  The  Impending  Crisis  of  the  South.     (A.  B.  Bufdick,  New 


*The  above  miscellaneous  pamphlets  were  used  in  chapters  I  and  II.  Specific 
references  are  not  given  to  any  of  them  in  the  text,  but  the  writer's  views  are  based 
very  largely  on  material  found  in  these  publications.  They  are  all  rare  books  without 
dates  in  many  cases,  but  they  can  be  obtained  at  the  libraries  referred  to  by  use  of 
the  author  and  title  only. 

**Aside  from  the  books  and  articles  by  Fite,  Sanborn,  and  Ackerman,  the  sec- 
ondary material  relating  to  the  Illinois  Central  is  practically  worthless.  With  slight 
exception  all  published  material  relating  to  the  history  of  the  company  is  based  on 
Mr.  W.  K.  Ackerman's  paper  on  Early  Illinois  Railroads,  read  before  the  Illinois 
Historical  Society.  The  paper  is  excellent  so  far  as  it  treats  of  events  coming  under 
Mr.  Ackerman's  personal  observation,  but  the  remainder  is  merely  a  collection  of 
interesting  incidents.  Very  little  secondary  material  is  absolutely  inaccurate,  but  at 
the  same  time,  an  equally  small  portion  is  of  real  historical  value. 


174  HISTORY   OF   ILLINOIS   CENTRAL   RAILROAD  [458 

York,  1860.)  Treats  of  conditions  in  the  South  at  the  commencement  of 
the  Civil  War  and  shows  the  relation  between  the  West  and  South.  (Cf. 
Olmsted's  various  travels  in  the  South.) 

G.  Gale,  Upper  Mississippi.  Clark  &  Co.,  Chicago,  1867.)  Refers  to 
early  history  of  Galena,  but  is  of  little  value. 

J.  B.  Sanborn,  Congressional  Grants  of  Land  in  Aid  of  Railways. 
(University  of  Wisconsin  Publications,  Madison,  1899.)  Chapter  II  gives 
a  summary  of  Congressional  legislation  respecting  the  Illinois  Central. 
An  accurate  treatment  of  the  subject. 

Newton,  Railway  Legislation  in  Illinois,  1828  to  1870.  (Mss.  thesis  in 
University  of  Illinois  Library.)  Gives  a  summary  of  legislation  by  Illinois 
on  railroads  and  canals  from  1828  to  1870.  Of  fair  historical  value. 

H.  W.  Quaintance,  The  Influence  of  Farm  Machinery  on  Production 
and  Labor.  (University  of  Wisconsin,  Madison,  Wis.,  1904.) 

Fite,  The  Agricultural  Development  of  the  West  during  the  Civil  War. 
(Quarterly  Journal  of  Economics,  XX,  259-278.)  Treats  of  prices  of 
western  produce  in  relation  to  freight  rates  and  the  inflation  of  the 
currency.  (Cf.  Mitchell,  History  of  the  Greenbacks.) 


INDEX. 

Adams  Express  Company,  granted  monopoly  by  Illinois  Central  Rail- 
road, 65. 

Agriculture,  in  Illinois,  the  leading  industry  in  1850,  12;  retarded  by  lack 
of  good  transportation,  13;  in  1870,  90;  improvements  in,  90;  profits 
from,  1861  to  1870,  go,  92;  growth,  1850  to  1870,  92  f.,  138,  159; 
influence  on  growth  of  Illinois  Central  Railroad,  90-92,  95,  138,  160; 
decline  in  Atlantic  states,  76. 

Arthur,  Mr.,  general  superintendent  of  Illinois  Central  Railroad,  64. 

Baltimore  and  Ohio  Railroad,  83,  162. 

Baltimore  and  Ohio  Southwestern  Railroad,  see  Ohio  and  Mississippi 
Railroad. 

Belleville,  Southern  Illinois  and  Du  Quoin  Railroad,  traffic  alliance  with 
Illinois  Central  Railroad,  69. 

Benton  Standard,  defends  Great  Western  Company,  36. 

Bissell,  Colonel,  aids  in  preparing  measure  favoring  eastern  promoters, 
38 ;  solicitor  of  Illinois  Central  Company,  49 ;  presents  petition  of 
Illinois  Central  Company  to  Chicago  council  for  terminal  facilities, 

49  f. 

Bloomington,  manufacturing  center,  108. 

Breese,  Sydney,  urges  building  of  Illinois  Central  Railrooad,   17;  urges 

grant  of  pre-emption  rights  to  a  central  Illinois  railroad,  23,  24,  26; 

ends   term   as   senator,   28;    defends    Great   Western   Company,    36; 

speaker  of  House,  37. 

C.  C.  C.  &  St.  Louis  Railroad,   see  Terre  Haute,  Alton  and  St.  Louis 

Railroad. 
Cairo,   specified   point  on   route  of  proposed  railroad,  43,  75  and  note ; 

receipts  of  grain  at,  98-100  and  notes,  (tables). 
Cairo  City  and  Canal  Company,  20,  26,  34;  incorporated  as  Great  Western 

Company,  21 ;  fights  incorporation  of  rival  company,  36  f. 
Cairo  Short  Line,  see  Belleville,  Southern  Illinois  and  Du  Quoin  Railroad. 
Cairo  Times,  defends  Great  Western  Company,  36. 
Champaign  county,  growth  of  agriculture  from  1850  to  1870,  93. 
Chicago, 

specified  point  on  route  of  proposed  railroad,  43,  74;  public  opinion 
divided  on  grant  of  lake  front  franchise,  51 ;  importance  of  lake 
front  franchise  grant,  54  f;  trade  connection  with  Iowa,  70;  as 
market,  81,  92;  influence  of  Illinois  Central  Railroad  on  rise  of, 
95;  receipts,  grain,  96;  live  stock,  103;  lumber,  105  f;  packing 
center,  102;  as  industrial  city,  108;  effect  of  extension  of  eastern 
railroads  on,  115. 

175 


176  HISTORY   OP   ILLINOIS   CENTRAL   RAILROAD  [460 

city  council  of,  attitude  towards  Illinois  Central  Railroad,  50;  dis- 
putes over  lake  front  right  of  way,  51 ;  votes  franchise  to  Illinois 
Central  Railroad,  51 ;  votes  franchise  over  mayor's  veto,  52 ; 
reconsiders  and  votes  new  franchise,  52;  reenacts  ordinance  of 
first  franchise,  54;  opposes  legislative  grant  to  railroads  of  sub- 
merged land  along  lake  front,  72. 

Chicago  and  Northwestern  Railroad,  connection  with  Illinois  Central 
Railroad,  68,  113;  shipment  of  grain  on,  97;  of  live  stocky  102. 

Chicago,  Burlington  and  Quincy  Railroad,  granted  right  to  submerged 
land  along  lake  front,  71  f . ;  connection  with  Illinois  Central  Railroad, 
95,  113;  shipment  of  grain  on,  97;  of  live  stock,  102  f. 

Chicago,  Fulton  and  Iowa  Railroad,  see  Chicago  and  Northwestern  Rail- 
road. 

Chicago,  Milwaukee  and  St.  Paul  Railroad,  see  Mineral  Point  Railroad. 

Civil  War,  effect  on  Illinois  Central  Railroad,  66  f.,  92,  112  f.,  138,  151; 
effect  on  southern  trade  route,  75,  76  n.,  77  f.,  87  n. 

Coal,  mining  of,  14,  106  f. ;  shipment  on  Illinois  Central  Railroad,  106  f. ; 
market,  107. 

Cobden,  Richard,  his  estimate  of  land  grant,  117,  129  n. 

Coles,  Edward,  governor,  17. 

Corn,  chief  farm  product  of  Illinois,  92;  shipments  on  Illinois  Central 
and  other  railroads,  compared,  95,  97;  receipts  at  Chicago  an.d  Cairo, 
compared,  99  f.  and  notes  (tables)  ;  effect  of  price  on  live  stock 
industry,  101 ;  payment  on  railroad  land,  137. 

Crimean  War,  effect  on  Illinois  Central  Railroad,  123. 

Crops,  condition  in  Illinois,  1856  to  1870,  96. 

Decatur,  manufacturing  center,  108;  junction  of  Wabash  and  Illinois  Cen- 
tral railroads,  113. 

Denny,  representative,  introduces  resolution  concerning  charter  of  Great 
Western  Railroad,  37  n. 

Douglas,  Stephen  A.,  advocates  government  assistance  for  Illinois  rail- 
road by  direct  grant  of  land  to  the  state,  24;  introduces  a  bill  for 
this  purpose,  25 ;  resorts  to  log-rolling  to  secure  adoption  of  his  land 
grants,  29;  urges  acceptance  of  Great  Western  release,  37  n. 

Dubuque,  specified  point  on  route  of  proposed  railroad,  43,  74. 

Dubuque  and  Sioux  City  Railroad,  traffic  alliance  with  Illinois  Central 
Railroad,  70;  lease  by  Illinois  Central  Railroad,  70,  96;  leases  Iowa 
Falls  and  Sioux  City  Railroad,  71. 

Economic  development,  retarded  by  lack  of  means  of  internal  transpor- 
tation before  1850,  n,  12. 

England,  in  American  grain  trade,  77  and  note;  bonds  of  Illinois  Central 
sold  in,  121  f . ;  effect  of  Crimean  War  on  money  market  in,  123 ;  iron 
for  Illinois  Central  Railroad  purchased  in,  131. 

Erie  Canal,  completed,  80;  deepened,  82;  freight  rates  on,  84. 

Erie  Railroad,  83. 

Europe,  in  American  grain  trade,  77. 

Freight  traffic,  competition  between  all-rail  and  water  routes -outside  Illi- 


461]  INDEX  177 

nois,  83-85;  rates  outside  Illinois,  84-86;  rates  in  Illinois,  87,  147; 
earnings  from,  146;  light,  149. 

French,  Augustus  C.,  governor,  recommends  acceptance  of  plan  of  east- 
ern memorialists  concerning  railroad,  38;  ex  officio  director  of  Illinois 
Central  Railroad,  42. 

Fruit  raising,  in  Illinois,  104. 

Fuel,   107. 

Galena,  specified  point  on  route  of  Illinois  Central  Railroad,  43 ;  opposi- 
tion to  granting  franchise  to  Illinois  Central  Railroad,  56,  57  n. ; 
manufacturing  center,  108. 

Galena  and  Chicago  Union  Railroad,  10;  traffic  alliance  with  Illinois  Cen- 
tral Railroad,  68,  95 ;  grain  shipment  on,  99  n. 

Grain,  production  in  United  States,  1850  to  1870,  79  n.  (table)  ;  increase 
in  production  in  Illinois,  92  ff . ;  price  of,  92;  payment  on  land  in,  137. 

Granger  movement,  rise  of,  112  n. 

Great  Lakes,  as  eastern  trade  route,  80,  81 ;  improvement  of  harbors  of, 
83;  freight  rate  on,  84. 

Great  Western  Railroad  (Wabash),  assisted  by  Illinois  Central  Railroad, 
68;  traffic  alliance  with,  96;  competition  with,  162. 

Great  Western  Railway  Company,  19  f.,  34;  charter  of,  20  f . ;  purchases 
internal  improvement  works  of  the  state,  21;  failure  of,  22;  charter 
repealed,  22 ;  reincorporated,  27 ;  release  accepted  by  House,  refused 
by  Senate,  37. 

Gridley,  Ashael,  introduces  in  senate  bill  to  incorporate  Illinois  Central 
Railroad,  38. 

Gurnee,  Walter,  mayor,  51  ;  vetoes  lake  front  franchise  of  Illinois  Cen- 
tral Railroad,  52  f . ;  signs  second  franchise,  53. 

Holbrook,  Darius  B.,  incorporator  of  Central  Railroad  Company,  17;  of 
Cairo  City  and  Canal  Company,  20. 

Illinois,  economic  development  retarded  by  lack  of  good  transportation 
before  1850,  n  f.,  79  f . ;  conditions  in  1850,  9  ff.,  159;  importance  of 
Illinois  Central  Railroad  in  development  of,  56,  75,  79  f.,  115,  159  f . ; 
conditions  from  1857  to  1859,  66,  137;  early  trade  of,  74;  grain  pro- 
duction in,  79  and  note ;  as  natural  trade  center,  80  and  note ;  immi- 
gration into,  1830  to  1850,  12 ;  1850  to  1870,  88  f . ;  growth  of  agriculture, 
1850  to  1870,  92-93  (table),  138,  160;  conditions  in  1870,  90,  115,  159; 
live  stock  industry  in,  100-102;  fruit  raising  in,  104;  lumber  supply 
in,  105,  107;  coal  mining  in,  106  f . ;  manufactures  in,  108;  price  of 
land  in,  117;  credit  of,  159;  taxes,  159. 

Illinois  Central  Railroad,  building  by  state  urged  in  1835,  17;  incorpo- 
rated, 1836,  17;  first  charter,  18;  assistance  to  urged  in  Congress, 
24-26;  grant  of  public  lands  to,  31;  various  routes  suggested,  35; 
bill  for  incorporation  passed,  38;  terms  of  charter  of,  39;  difficulties 
in  construction  of,  40,  46  f.,  60;  early  financial  support  of,  40,  42; 
formal  organization  of  company,  42  f. ;  stockholders,  English  and 
Dutch,  42  n.,  121  f.,  129,  132,  159  n. ;  commencement  of  construction 
work  on,  43,  47  f . ;  route  of  preliminary  survey,  43 ;  sectional  rivalry 


178  HISTORY   OF    ILLINOIS   CENTRAL   RAILROAD  [462 

over  route,  43  f . ;  conditions  determining  selection  of  route,  45 ;  con- 
tracts for  construction  of,  46  ff.,  125;  method  of  construction  of, 
47  n. ;  controversy  at  Chicago  over  terminal  facilities  of,  48  ff . ;  allied 
with  Michigan  Central  Railroad  to  secure  entrance  to  Chicago,  49; 
opposition  in  Chicago  to,  50;  proposed  route  of  entrance  to  Chicago, 
50  f . ;  provisions  of  lake  front  right  of  way  franchise,  51,  54;  board 
of  directors  refuses  second  lake  front  franchise,  52;  construction  on 
Lake  Calumet-Chicago  division,  52  f . ;  first  completed  section  of,  53 ; 
dispute  with  Southern  Michigan  Railroad  over  crossing,  53  and  note ; 
importance  of  lake  front  franchise  to,  54 ;  construction  work  on  lake 
front  route,  55  f . ;  St.  Charles  Air  Line,  branch,  56 ;  difficulties  in 
fulfilling  construction  contracts,  58  f . ;  Illinois  Central  Company  en- 
gages directly  in  construction  work  of,  59;  engineering  problems  in 
construction  of,  60 ;  table  of  dates  of  completion  of  construction  work 
by  divisions,  61  n. ;  formal  opening  of,  61 ;  final  completion  of,  61  f . ; 
character  of  construction  wor  kand  equipment,  62  f.,  131  f.,  151  f . ; 
problems  in  1857,  64,  66,  131  f . ;  organization  of  operating  department, 
64;  transfer  of  offices  of  officials  from  New  York  to  Illinois,  64  f. ; 
New  York,  official  meeting  place  of  board  of  directors,  42,  64  f. ; 
service  of,  65 ;  relation  to  Post  Office  Department,  65 ;  grants  mo- 
nopoly to  Adams  Express  Company,  65;  prosperity  of,  in  1861,  66; 
effect  of  Civil  War  on,  66  f.,  92,  113,  138,  151,  162;  prosperity  of, 
1866  to  1870,  67,  146;  extensions  and  traffic  alliances,  67  ff.,  95  f.,  155; 
lease  of  Dubuque  and  Sioux  City  Railroad,  70  f . ;  granted  right  to 
submerged  land  along  lake  front,  71  f . ;  decision  of  courts  on  this 
grant,  adverse,  72;  physical  development  of,  72  f.,  133-135;  obstacles 
to  development  of,  73 ;  part  of  large  railroad  project,  74  f . ;  place  in 
Mississippi  valley  trade  route,  75,  76  n.,  91,  114,  162;  character  of 
country  traversed  by,  79,  92 ;  extent  of  system,  80  and  note ;  relation 
to  economic  development  of  Illinois,  56,  90-92,  95,  104  f.,  115;  influ- 
ence on  rise  of  Chicago,  95,  114;  comparative  value  to  northern  and 
southern  Illinois,  95 ;  value  to  government  during  the  Civil  War, 
158;  nature  of  traffic  on,  90  f.,  96  f.,  100-109;  effect  of  high  price  of 
corn  on,  102  f . ;  shipment  of  grain  on,  96  f.,  106;  of  live  stock,  100- 
103;  of  garden  and  dairy  products,  104;  lumber,  105  f. ;  of  coal, 
106  f . ;  of  factory  products,  108  f . ;  increase  in  general  traffic  on, 
1855  to  1870,  108-112  (table,  no)  ;  ratio  of  local  to  through  traffic  on, 
no;  comparison  of  northbound  and  southbound  traffic  on,  105  f., 
in;  immigrant  use  of,  112;  passenger  business,  112  f. ;  railroad  con- 
nections with  east  and  west  points,  113;  rivals  of,  114  f.,  162;  factors 
in  success  of,  114;  tariff  arrangements  of,  65  f.,  87  f.,  90;  fiscal 
policy  proposed  by  Schuyler,  117  f . ;  fiscal  policy,  as  carried  out,  57, 
58  n.,  64,  72,  119,  124-128,  130,  132,  140-144,  153  n.,  155,  161  f. ;  assets 
of,  120-127,  135  and  note,  153  n.,  156,  161  f. ;  as  land  owner,  9,  135- 
140,  153  n. ;  stocks  of,  42,  57,  119  f.,  122  f.,  128  f.,  135  n.,  144  f., 
154.  156;  bonds  of,  59,  120-125;  128,  136,  140  f.,  143;  liabilities  of, 
120-127,  156;  cost  of,  46,  59,  62,  116,  118  f.,  124  f.,  131-133,  156; 


463]  INDEX  179 

expenditures  of,  122,  124,  130  f.,  133  and  note,  141,  147  ff.,  156; 
assessments,  120,  122,  126,  128  f.,  135,  143  f . ;  earnings,  91  n.,  103, 
109,  126,  134  f.,  142,  146  and  note,  152  f.,  155;  dividends,  67,  129  f., 
135,  142,  144,  153  ff. ;  financial  condition,  1853  to  1857,  123-128,  131  f. ; 
in  1858,  128  f. ;  traffic  development,  1857  to  1870,  133;  situation  in 
1870,  isolation,  162  f. 

Illinois  and  Michigan  Canal,  9;  southern  terminus  specified  point  on 
Illinois  Central  Railroad,  43 ;  shipment  of  grain  on,  97. 

Immigration,  into  Illinois  1830  to  1850,  12;  1850  to  1870,  80  n.,  88  f. ;  effect 
of  increase  in  Atlantic  states,  76;  relation  of  Illinois  Central  Railroad 
to,  112. 

Industries,  development  in  Atlantic  states,  76;  condition  in  Illinois,  108. 

Internal  improvements,  10;  need  of,  n;  Act  of  1837,  18,  116;  failure  of, 
19. 

Iowa,  railroad  development  in,  70;  settlement  of,  88;  wheat  production 
in,  96;  expenditures  on  railroads  leased  by  Illinois  Central  Railroad 
in,  134  n.,  152  f. 

Iowa  Falls  and  Sioux  City  Railroad,  construction  of,  71. 

Iroquois  county,  growth  of  agriculture,  1850  to  1870,  93. 

Jenkins,  A.  M.,  proposes  a  survey  for  a  central  railroad,  17. 

Labor,  price  of,  farm,  59,  92;  railroad,  60,  124,  131,  151. 

Lake  Front  Case,  71  f. 

Lake  Shore  and  Michigan  Southern  Railroad,  conflict  with  Michigan 
Central  Railroad,  48  f . ;  hostility  to  Illinois  Central  Railroad,  50 ; 
completed,  83. 

Land  grant,  urged  for  building  a  central  Illinois  railroad,  17  ff.,  74; 
urged  by  Breese,  22  f . ;  by  Senator  Douglas,  24  ff. ;  bill  passed,  31, 
74;  importance  to  Illinois  Central  Railroad,  32,  117,  157,  160;  differ- 
ent plans  for  utilizing,  33  ff. ;  sale  of  land  from,  90,  135  ff.,  139  and 
note,  140;  Cobden's  estimate  of,  117,  129  n. ;  financial  value  of,  117, 
136  ff. ;  mortgage  on,  125,  136;  restraint  on,  143;  text  of  act,  165  ff. 

Lead,  mining  in  1850,  14. 

Legislature  of  Illinois,  action  in  Lake  Front  Case,  71  f. 

Live  stock,  character  of  industry  in  Illinois,  13,  101  ff. ;  price  of,  92; 
shipment  of,  91,  100  f. 

Livingstone  county,  growth  of  agriculture  from  1850  to  1870,  93. 

Logansport,  Peoria  and  Burlington  Railroad,  traffic  alliance  with  Illinois 
Central  Railroad,  69;  see  Peoria  and  Oquaka  Railroad. 

Lumber,  105. 

Mail,  federal  provision  for  transportation  on  Illinois  Central  Railroad,  65. 

Manufactures,  slight  development  before  1850,  14  f. ;  1860  to  1870,  108. 

Markets,  for  early  Illinois  products,  n,  15;  southern,  74,  76  n.,  77; 
effect  of  Civil  War  on,  91,  160;  eastern,  76,  79,  90,  160  f. ;  European, 
77  and  note,  79,  160. 

Mason,  Roswell  B.,  engineer  in  chief  of  construction  work  of  Illinois 
Central  Railroad,  43;  survey  of  route,  44;  presents  petition  for  en- 
trance of  railroad  into  Chicago,  50;  general  superintendent,  64; 


180  HISTORY   OF   ILLINOIS    CENTRAL   RAILROAD  [464 

resignation,  64;  estimate  of  cost  of  Illinois  Central  Railroad,  118  f. 

McClellan,  G.  B.,  general  superintendent  of  Illinois  Central  Railroad,  64. 

Memorial,  plan  of,  37;  favored  by  governor  and  legislature,  38;  fiscal 
basis  of,  116;  text  of,  167  f. 

Michigan  Central  Railroad,  conflict  with  Lake  Shore  and  Michigan  South- 
ern Railroad,  48  f . ;  allied  with  Illinois  Central  to  secure  entrance  to 
Chicago,  49;  uses  Illinois  Central  track,  53;  granted  right  to  sub- 
merged land  along  lake  front,  71  f. 

Milwaukee,  trade  connection  with  Iowa,  70. 

Mineral  Point  Railroad,  assisted  by  Illinois  Central  Railroad,  68. 

Mining,  handicapped  by  high  cost,  14,  106. 

Mississippi  Central  Railroad,  part  of  Mississippi  valley  trade  route,  75. 

Mississippi  River,  part  of  Mississippi  valley  trade  route,  75,  76  n. ;  freight 
rate  on,  85  f. 

Mississippi  valley,  development  of  trade  route  of,  75 ;  effect  of  Civil  War 
on  trade  route,  67,  75  ff.,  87  n.,  98;  relation  to  Illinois  Central  Rail- 
road, 1 60,  162. 

Mobile,  specified  point  on  Mississippi  valley  railroad,  74. 

Mobile  and  Ohio  Railroad,  29;  land  grant  to,  75;  part  of  Mississippi  val- 
ley trade  route,  75 ;  effect  of  Civil  War  on,  87. 

Morrill  act  of  1861,  effect  on  industries,  76. 

Morris,  Gouverneur,  member  of  board  of  directors  of  Illinois  Central 
Railroad,  40;  bankrupt,  123. 

Morrison,  J.  L.  D.,  introduces  substitute  bill  to  incorporate  Illinois  Cen- 
tral Railroad,  38. 

Neal,  David  A.,  vice  president  of  Illinois  Central  Railroad,  agent  to  place 
loan  in  Europe,  120. 

New  Orleans,  shipping  port  of  Illinois  products,  74;  decline,  78;  rivalry 
with  New  York,  85  ff. 

New  Orleans,  Jackson  and  Great  Northern  Railroad,  part  of  Mississippi 
valley  trade  route,  75 ;  effect  of  Civil  War  on,  87  n. 

New  York  Central  and  Hudson  River  Railroad,  competition  with  Penn- 
sylvania Central  Railroad,  83 ;  freight  rates  on,  85 ;  extension  of,  162. 

New  York  City,  meeting  place  of  charter  company  of  Illinois  Central 
Railroad,  42;  official  meeting  place  of  board  of  directors,  64  f. ;  ship- 
ping port,  78;  rivalry  with  New  Orleans,  85  ff. 

Northern  Cross  Railroad,  23. 

Oats,  Illinois  staple,  93  f. ;  shipment,  97;  receipts  at  Chicago  and  Cairo, 
compared,  99  f.  and  notes  (tables). 

Ohio  and  Mississippi  Railroad,  relation  to  Illinois  Central  Railroad,  68, 
96,  113,  155;  completed,  1856,  83;  sale  of  bonds,  123. 

Osborn,  William  H.,  dominant  figure  in  history  of  Illinois  Central  Rail- 
road, 1853  to  1882,  41;  control  of  financial  affairs  of,  124;  financial 
policy  during  panic  of  1857,  127  f. ;  English  investors'  criticism  of, 
128  n. 

Packing  industry,  1856  to  1870,  100. 


465]  INDEX  181 

Palmer,  John  M.,  governor,  vetoes  bill  granting  to  railroads  right  to 
submerged  land  on  lake  front,  72. 

Panic,  of  1857,  66,  127,  136  f.,  146;  of  Wall  street  in  1853,  123. 

Pennsylvania  Central  Railroad,  completion  to  Chicago,  83;  effect  of 
extension  on  Illinois  Central  Railroad,  162;  see  Logansport,  Peoria, 
and  Burlington  Railroad. 

Peoria  and  Oquaka  Railroad,  assisted  by  Illinois  Central  Railroad,  96, 
155',  see  Logansport,  Peoria,  and  Burlington  Railroad. 

Population,  increase  in  East,  76 ;  in  Europe,  77 ;  in  upper  Mississippi 
valley,  78,  88;  effect  of  increase  on  agriculture,  78  f . ;  distribution  in 
the  United  States,  1850,  1870,  79  (table)  ;  in  Illinois,  1870,  89  (table), 
159. 

Promoters,  eastern,  present  memorial  of  proposed  railroad,  37. 

Railroad  materials,  purchase  and  transporttation  of,  60;  cost  of,  151; 
quality  of,  151  n. 

Railroads,  early,  10;  inadequate  service  before  1850,  10;  need  of,  9  ff . ; 
failure  of  efforts  to  build  in  Illinois,  1837  to  1845,  22;  eastern,  83, 
114,  162  f. ;  southern,  75,  87  n.,  98;  Illinois,  81  and  note,  95  ff.,  102, 
in,  113;  see  individual  railroads. 

Rails,  cost  of,  59  n.,  133  n. ;  quality  of,  62,  72,  151  n. 

Rantoul,  Robert,  presents  memorial  concerning  proposed  railroad  in  Illi- 
nois, 37;  aids  in  preparing  measure  favoring  eastern  promoters,  38; 
member  of  board  of  directors  of  Illinois  Central  Railroad,  40;  sketch 
of  public  life,  41 ;  his  estimate  basis  of  fiscal  program  of  memorial- 
ists, 116,  118. 

Roads,  poor  condition  of,  early,  10. 

St.  Louis,  place  in  Illinois  Central  system,  80,  81,  85  f. ;  as  market,  80. 

St.  Louis,  Alton  and  Chicago  Railroad,  rival  of  Illinois  Central  Rail- 
road, 69. 

Schuyler,  Robert,  member  of  board  of  directors  of  Illinois  Central  Rail- 
road, 40;  sketch  of  public  life,  41;  president  of  board  of  directors 
of  Illinois  Central  Railroad,  42;  report  to  board  of  directors  on 
fiscal  plan  of  Illinois  Central  Railroad,  117  f. 

Sheep  raising,  influenced  by  price  of  cotton,  101. 

South,  the,  relation  of  to  Illinois  Central  Railroad,  67,  86,  91. 

Southern  Michigan  Railroad,  see  Lake  Shore  and  Michigan  Central 
Railroad. 

Springfield  and  Meredosia  Railroad,  10. 

Tariff,  early  arrangement  on  Illinois  Central  Railroad,  65  f . ;  effect  of 
Civil  War  on,  67,  1 12,  147 ;  eastern  freight,  83  ff . ;  southern  freight, 
85  f. ;  ocean  freight,  86  (table);  regularized  on  Illinois  Central  Rail- 
road, 91;  low,  impracticable,  104;  on  lumber,  105;  on  coal,  106; 
passenger,  113,  147. 

Terre  Haute,  Alton  and  St.  Louis  Railroad,  assisted  by  Illinois  Central 
Railroad,  68;  traffic  alliance  with  Illinois  Central  Railroad,  69,  96, 
in;  shipment  of  live  stock  on,  102. 

Trade,  internal  before  1850,   n,   13,   15;  retarded  by  lack  of  transporta- 


182  HISTORY  OF   ILLINOIS   CENTRAL   RAILROAD  [466 

tion,  15,  16,  74;  effect  of  eastern  industrial  development  on,  76; 
increased  European,  77. 

Trade  routes,  effect  of  Civil  War  on,  67,  75  ff.,  87  n.,  98;  effect  of  indus- 
trial development  on,  75 ;  natural,  of  Illinois,  80 ;  comparison  of 
advantages  of  rival,  85  f . ;  part  played  by  Illinois  Central  Railroad 
in  development  of,  160,  162. 

Transportation,  water,  improvements  in,  82  f . ;  factors  in  cheapening 
cost  of,  82  f. ;  rail,  eastern  development,  83  f.,  114,  160,  162;  com- 
petition between  all-rail  and  water  for  Illinois  exports,  83  ff. ;  ocean, 
rates,  86  (table);  local,  rates,  87  f.,  147;  rail,  southern  develop- 
ment, 98. 

Wabash  Railroad,  see  Great  Western  Railroad. 

Walker,  Robert  J.,  agent  to  place  loan  for  Illinois  Central  Railroad  in 
Europe,  121. 

Waterways,  importance  to  Illinois  trade,  80;  relation  to  Illinois  Central 
Railroad,  81 ;  improvement  of,  82. 

West  Indies,  in  American  grain  trade,  77  n. 

Wheat,  Illinois  staple,  93  f . ;  rise  in  price  of,  92 ;  shipment  on  railroads, 
95  f. ;  Iowa  staple,  96;  receipts  at  Cairo,  98  f. 


UNIVERSITY  OF  ILLINOIS  STUDIES 

IN  THE 

SOCIAL  SCIENCES 


PUBLISHED  QUARTERLY 

BY 

UNIVERSITY  OF  ILLINOIS 


VOLUME  IV 


URBANA,  ILL. 
1915 


BOARD  OF  EDITORS 

ERNEST  L.  BOGART  JOHN  A.  FAIRLIE 

LAURENCE  M.  LARSON 


TABLE  OF  CONTENTS 

N0-  PAGES 

1.  The  Illinois  Whigs  before  1846.     By  Charles  Mans- 
field Thompson,  Ph.D 1-165 

2.  The  Defeat  of  Varus  and  the  German  Frontier 
Policy  of  Augustus.     By  William  A.  Oldfather, 
Ph.D.,  and  Howard  V.  Canter,  Ph.D 166-284 

3-4.     The  History  of  the  Illinois  Central  Railroad  to 

1870.     By  Howard  Gray  Brownson,  Ph.D 285-466 


UNIVERSITY  OF  ILLINOIS-URBANA 


HISTORY  OF  THE  ILLINOIS  CENTRAL  RAILROAD 


